Accounting Standards

Accounting Standards

CRITERIA FOR CLASSIFICATION OF ENTERPRISES

Criteria for classification of non-corporate entities as decided by the Institute of Chartered Accountants of India

Level I Entities

Non-corporate entities which fall in any one or more of the following categories, at the end of the relevant accounting period, are classified as Level I entities:

Entities whose equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India.

Banks (including co-operative banks), financial institutions or entities carrying on insurance business.

All commercial, industrial and business reporting entities, whose turnover (excluding other income) exceeds rupees fifty crore in the immediately preceding accounting year.

All commercial, industrial and business reporting entities having borrowings (including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year.

holding and subsidiary entities of any one of the above.

Level II Entities (SMEs)

Non-corporate entities which are not Level I entities but fall in any one or more of the following categories are classified as Level II entities:

All commercial, industrial and business reporting entities, whose turnover (excluding other income) exceeds rupees forty lakh but does not exceed rupees fifty crore in the immediately preceding accounting year.

All commercial, industrial and business reporting entities having borrowings (including public deposits) in excess of rupees one crore but not in excess of rupees ten crore at any time during the immediately preceding accounting year.

Holding and subsidiary entities of any one of the above.

Level III Entities (SMEs)

Non-corporate entities which are not covered under Level I and Level II are considered as Level III entities.

Criteria for classification of companies under the Companies (Accounting Standards) Rules, 2006

Small and Medium-Sized Company (SMC) as defined in Clause 2(f) of the Companies (Accounting Standards) Rules, 2006:

(f) “Small and Medium Sized Company” (SMC) means, a company-

whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India;

which is not a bank, financial institution or an insurance company;

whose turnover (excluding other income) does not exceed rupees fifty crore in the immediately preceding accounting year;

which does not have borrowings (including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year; and

which is not a holding or subsidiary company of a company which is not a small and medium-sized company.

Explanation: For the purposes of clause (f), a company shall qualify as a Small and Medium Sized Company, if the conditions mentioned therein are satisfied as at the end of the relevant accounting period.

Non-SMCs

Companies not falling within the definition of SMC are considered as Non-SMCs.

Harmonisation of differences between the Accounting Standards issued by the ICAI and those notified by the Central Government

The Central Government, on December 7, 2006, notified Accounting Standards in the Companies (Accounting Standards) Rules, 2006. These Accounting Standards were different in certain respects from the Accounting Standards issued by the council of ICAI. It has now been decided to harmonise these differences and clarify as to the applicability of both the sets of Accounting Standards to various entities.

Harmonisation of Differences caused by Accounting Standards Interpretations (ASIs)

The consensus portion of most of the ASIs has been included as ‘Explanation’ to the relevant paragraphs in the notified Accounting Standards. The Council has decided to follow the same. Accordingly, Standards issued by ICAI will also have these ASIs inbuilt in the standard itself. Thus, the Standards are being amended to incorporate the consensus portion of the ASIs as explanation to the relevant paragraphs.

Withdrawal of Accounting Standards Interpretations

ASI 2, Accounting for Machinery Spares (Re. AS 2 and AS 10) and ASI 11, Accounting for Taxes on Income in case of an Amalgamation (Re. As 22) have been withdrawn. These ASIs would not be included in the standards.

Issuance of Guidance Notes in lieu of ASIs

The council decided to withdraw the following ASIs and issue the same as Guidance Notes.

ASI 12 Applicability of AS 20 (Re. AS 20)

ASI 23 Remuneration paid to key management personnel — whether a related party transaction (Re. AS 18)

ASI 27 Applicability of AS 25 to Interim Financial Results (Re. AS 25)

ASI 29 Turnover in case of Contractors (Re. AS 7 (Revised 2002)

Harmonisation of Definition of Smaller Companies

The Council has retained three levels of entities, for Non- Corporate Enterprises. However, the ICAI has harmonized the definitions for smaller companies to fall in line with the Companies (Accounting Standards) Rules, 2006.

It must be noted here, that only corporate entities shall be governed by the Accounting Standard provisions contained in the notified Rules.

The applicability of Accounting Standards to various entities is summarized in the following tables.

Note:

The under mentioned Accounting Standards shall be applicable to all corporate entities for accounting periods commencing on or after December 7, 2006;

For Non-Corporate entities, it shall be applicable from 1st April 1, 2008 (with standards which are being amended to incorporate changed definitions of SMEs and the consensus portion of the ASIs)

Applicability of Accounting Standards - An overview

Accounting Standards

To all Corporate Entities [As per Companies (Accounting Standards) Rules]

To all Non-Corporate entities [As per ICAI Accounting Standards]

AS 1

Disclosure of Accounting Policies

Y

Y

AS 2

Valuation of Inventories

Y

Y

AS 4

Contingencies and Events Occurring After the Balance Sheet Date

Y

Y

AS 5

Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

Y

Y

AS 6

Depreciation Accounting

Y

Y

AS 7

Construction Contracts (Revised 2002)

Y

Y

AS 9

Revenue Recognition

Y

Y

AS 10

Accounting for Fixed Assets

Y

Y

AS 11

The Effects of Changes in Foreign Exchange Rates (Revised 2003)

Y

Y

AS 12

Accounting for Government Grants

Y

Y

AS 13

Accounting for Investments

Y

Y

AS 14

Accounting for Amalgamations

Y

Y

AS 15

Employee Benefits (Refer Note 1)

Y

Y

AS 16

Borrowing Costs

Y

Y

AS 18

Related Party Disclosures

Y

Not applicable to
Level III

AS 19

Leases (Refer Note 2)

Y

Y

AS 20

Earnings Per Share (Refer Note 3)

Y

Y

AS 22

Accounting for Taxes on Income

Y

Y

AS 24

Discontinuing Operations

Y

Not applicable
to Level III

AS 25

Interim Financial Reporting (Refer Note 6)

Y

Y

AS 26

Intangible Assets

Y

Y

AS 28

Impairment of Assets (Refer Note 4)

Y

Y

AS 29

Provisions, Contingent Liabilities and Contingent Assets (Refer Note 5)

Y

Y

Note: The Notes referred to in the previous table are given in the table titled "Relaxations of certain requirements for SMCs/Level II & Level III enterprises" below.

The Exemptions available to both, SMCs (i.e., governed by the Rules) and also available to Level II and Level III Enterprises (i.e., governed by the ICAI Accounting Standards) in entirety are given in the following table:

AS 3

Cash Flow Statements

AS 17

Segment Reporting

AS 21*

Consolidated Financial Statements

AS 23*

Accounting for Investments in Associates in Consolidated Financial Statements

AS 27*

Financial Reporting of Interests in Joint Ventures (to the extent of requirement relating to Consolidated Financial Statements)

Note: * AS 21, 23 and 27 are applicable only when relevant regulator requires compliance of these standards

Relaxations of certain requirements for SMCs / Level II & Level III enterprises :

Note No.

Accounting Standards

Relaxations available to Small and Medium Companies, Level II Enterprises and Level III Enterprises

1

AS 15, Employee Benefits

• Paragraphs 11-16 dealing with recognition and measurement of short term accumulating compensated absences which are non-vesting

• Paragraphs 46 and 139 dealing with discounting of amounts that fall
due more than 12 months after the balance sheet date

• Paragraphs 50–116 dealing with Defined Benefit plans

• Paragraphs 117–123 dealing with actuarial valuations

• Paragraphs 129-131 in respect of other long-term benefits

Note: AS 15 (Revised 2005) issued by ICAI exempts Level II enterprises having less than 50 employees from the application of PUC method, i.e., these enterprises can use other rational method for accrual of liabilities.

However, the Companies (Accounting Standards) Rules, 2006 do not contain such exemption.

2

AS 19, Leases 22(c),

• Requirements relating to disclosures as given in paragraphs (e) and (f); 25(a), (b) and (e); 37(a) and (f); and 46(b) and (d) are not applicable to SMCs and level II/III enterprises.

• Further to these relaxations, Level III enterprises are also not required to give Paragraphs 37(g) and 46(e) disclosures.

3

AS 20, Earnings Per Share

• Diluted earnings per share (both including and excluding extraordinary items) is not required to be disclosed for SMCs and level II/III non corporate enterprises.

• Further, Information required by paragraph 48(ii) of AS 20 regarding
disclosures for parameters used in calculation of EPS, are also not required to be disclosed by Level III entities.

4

AS 28, Impairment of Assets

• Value in use can be based on reasonable estimate instead of computing it by present value technique. Further, information required by paragraph 121(g) relating to discount rate used, need not be disclosed.

5

AS 29, Provisions, Contingent Liabilities and Contingent Assets

• Paragraphs 66 and 67 relating to disclosures for amount and description for each class of provision are not required to be disclosed.

6
AS 25, Interim Financial Reporting • AS 25 is applicable only if a company/non-corporate entity elects to prepare and present an interim financial report. Only certain Non-SMCs/Level I entities are required by the concerned regulatory to present interim financial results, eg, quarterly financial results required by the SEBI.

AS-1 — DISCLOSURE OF ACCOUNTING POLICIES

Significant Accounting Policies followed in preparation of accounts be disclosed at one place along with the financial statements.
Any change and financial impact of such change should be disclosed.
If fundamental assumptions (going concern, consistency and accrual) are not followed, the fact to be disclosed. Going concern assumption is assessed for a foreseeable period of one year
Accounting Policies adopted by the enterprise should represent true and fair view of the state of affairs of the financial statements
Major considerations governing selection and application of accounting policies are: i) Prudence, ii) Substance over form and iii) Materiality.
Note – In relation to derivative contracts (e.g. foreign exchange forward contracts) the Institute interpreted on the principles of prudence that the loss (net), if any on each reporting date shall be provided through the statement of profit and loss account.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-1

1)
Are the following fundamental accounting assumptions followed:

(a) Going concern concept (Note, the concept shall be evaluated with reference to foreseeable period of one year) ?
Yes/No

(b) Consistency in accounting policies?
Yes/No

(c) Accrual basis of preparing Financial Statement?
Yes/No

2) If answer to any of the above is in negative, has disclosure been made?
Yes/No

3) Have significant accounting policies been listed out and disclosed at one place as part of financial statement?
Yes/No

4) Is there any change in accounting policy:
Yes/No

(a)

(i)
Which has a material effect in current period?
Yes/No

(ii)
If yes, whether disclosed with quantification?
Yes/No

(iii)
If no, whether indicated the fact, that not possible?
Yes/No

(b)
(i)
Which has a material effect in later period?
Yes/No

(ii)
If yes, whether disclosed?
Yes/No

AS-2 — VALUATION OF INVENTORIES (REVISED)

The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Inventories are valued at lower of cost or net realisable value. Specific identification method is required when goods are not ordinarily interchangeable. In other circumstances, the enterprise may adopt either weighted average cost method or FIFO methods whichever approximates the fairest possible approximisation of cost incurred. Standard Costing Method or Retail Inventory Method can be adopted only as a techniques of measurement provided where the results of these measurements approximates the results that would be arrived at after adopting specific identification method or weighted average method or FIFO method as may be applicable to the circumstances.
The financial statements should disclose: (a) the accounting policies adopted in measuring inventories, including the cost formula used; and (b) the total carrying amount of inventories and its classification appropriate to the enterprise.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-2

1)

(a)

Is the inventory valued at lower of cost and net realisable value?

Yes/No

(b)

Is the disclosure made to that effect in accounting policy?

Yes/No

2)

(a)

Which is the cost formula used

(i)

Specific identification?

Yes/No

(ii)

FIFO?

Yes/No

(iii)

Weighted Average?

Yes/No

(b)

Is the disclosure made to that effect in accounting policy?

Yes/No

3)

Have you ascertained whether cost includes

(a)

Cost of purchase (net of Modvatable duties)?

Yes/No

(b)

Direct labour?

Yes/No

(c)

Production overheads?

Yes/No

(d)

Such other direct cost to bring inventory to their present location and condition?

Yes/No

4)

Whether fixed overhead is worked out on normal production capacity; i.e., after taking into account loss of capacity due to planned maintenance?

Yes/No

5)

Have you ascertained that cost of conversion does not include the following:

(a)

Interest, (Unless permitted by AS-16)?

Yes/No

(b)

Administrative overheads?

Yes/No

(c)

Selling and distribution cost?

Yes/No

(d)

Abnormal wastage of material, labour and other production cost?

Yes/No

6)

If standard cost, as a technique of measurement is followed to ascertain cost, whether standards reviewed periodically?

Yes/No

7)

In arriving at cost of inventory, whether

(a)

Inter-divisional profits eliminated?

Yes/No

(b)

Foreign currency fluctuation excluded and charged as expense in respect of foreign currency loan obtained against stock?

Yes/No

8)

(a)

Is physical verification of inventory taken at year end?

Yes/No

(b)

In arriving at net realisable value, have you ascertained

(i)

Damaged/obsolete/non-moving stock?

Yes/No

(ii)

Subsequent sale price after Balance Sheet Date?

Yes/No

9)

Are the inventory in accounts classified into:

(a)

Raw material and components?

Yes/No

(b)

Stores and spares and tools?

Yes/No

(c)

Work-in-progress?

Yes/No

(d)

Finished goods?

Yes/No

AS-3 — CASH FLOW STATEMENTS

The standard sets out the requirement that where the cash flow statement is presented, it shall disclose a movement in "cash and cash equivalents" segregating various transactions into operating, investing and financing activity. It requires certain specific items to be addressed in the cash flows and certain supplemental disclosures for non-cash transactions.

Cash comprises cash on hand and demand deposits with banks.

Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash flows are inflows and outflows of cash and cash equivalents.

Operating activities are the principal revenue-generating activities of the enterprise and other activities that are not investing or financing activities. Examples, cash receipts from the sale of goods and the rendering of services; cash receipts from royalties, fees, commissions and other revenue; cash payments to suppliers for goods and services; cash payments to and on behalf of employees.

Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Examples, cash payments to acquire fixed assets (including intangibles). These payments include those relating to capitalised research and development costs and self-constructed fixed assets; cash receipts from disposal of fixed assets (including intangibles); cash payments to acquire shares, warrants or debt instruments of other enterprises and interests in joint ventures (other than payments for those instruments considered to be cash equivalents and those held for dealing or trading purposes).

Financing activities are activities that result in changes in the size and composition of the owners’ capital (including preference share capital in the case of a company) and borrowings of the enterprise. Example, cash proceeds from issuing shares or other similar instruments; cash proceeds from issuing debentures, loans, notes, bonds, and other short or long-term borrowings; and cash repayments of amounts borrowed.

Additionally certain items are required to be disclosed separately, like Income Tax, Dividends, etc.

The enterprise can choose either direct method or indirect method for presentation of its cash flows.

Cash flows arising from transactions in a foreign currency should be recorded in an enterprise’s reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the cash flow. A rate that approximates the actual rate may be used if the result is substantially the same as would arise if the rates at the dates of the cash flows were used. The effect of changes in exchange rates on cash and cash equivalents held in a foreign currency should be reported as a separate part of the reconciliation of the changes in cash and cash equivalents during the period.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS–3

1)

If the enterprise

(a)

A listed company?

Yes/No

(b)

Business enterprise having turnover exceeding Rs. 50 crores?

Yes/No

(c)

If yes to any of above, is cash flow statement prepared under indirect method?

Yes/No

(d)

Is necessary reference of cash flow statement made in the Audit Report?

Yes/No

2)

Depending upon the principal activity of the enterprise, is the classification of items in the

cash flow appropriate made into operating, financing and investment activities?

Yes/No

3)

Are the following items specifically addressed

Interest Income or Expense?

Yes/No

Dividends Paid or Received?

Yes/No

— Income Tax Paid or Refunds?

Yes/No

Conversion Gains or Losses in banks accounts denominated in foreign currency?

Yes/No

Effect of business acquisition or divestments?

Yes/No

Investment in subsidiaries, equity affiliates and joint venture?

Yes/No

Cash flows of foreign operations?

Yes/No

4)

Whether non-cash transactions like following are excluded from Cash Flow Statement

(a)

Acquisition of assets by assuming related liabilities?

Yes/No

(b)

Acquisition of an enterprise by issue of shares?

Yes/No

(c)

Conversion of debt into equity?

Yes/No

AS-4 — CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

Contingencies

The amount of a contingent loss should be provided for by a charge in the statement of profit and loss if it is probable that future events will confirm that, after taking into account any related probable recovery, an asset has been impaired or a liability has been incurred as at the balance sheet date, and a reasonable estimate of the amount of the resulting loss can be made.
The existence of a contingent loss should be disclosed in the financial statements if either of the conditions in above paragraph is not met, unless the possibility of a loss is remote.
Contingent gains should not be recognised in the financial statements.

Events occurring after the Balance Sheet Date

Assets and liabilities should be adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date or that indicate that the fundamental accounting assumption of going concern (i.e., the continuance of existence or substratum of the enterprise) is not appropriate.
Dividends stated to be in respect of the period covered by the financial statements, which are proposed or declared by the enterprise after the balance sheet date but before approval of the financial statements, should be adjusted.
Disclosure should be made in the report of the approving authority of those events occurring after the balance sheet date that represent material changes and commitments affecting the financial position of the enterprise.

Disclosure

If disclosure of contingencies is required by paragraph 11 of the Statement, the following information should be provided: the nature of the contingency, the uncertainties which may affect the future outcome, an estimate of the financial effect, or a statement that such an estimate cannot be made.
If disclosure of events occurring after the balance sheet date in the report of the approving authority is required by the Standard then it shall disclose; the nature of the event, an estimate of the financial effect, or a statement that such an estimate cannot be made.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-4

1)

Are contingent liabilities disclosed in accounts by way of notes as to its amount, nature and uncertainties which may affect the future outcome?

Yes/No

2)

(a)

Out of the contingent liability, have you come across any item which is probable to result in a loss to the enterprise?

Yes/No

(b)

If yes, whether provision is made?

Yes/No

3)

Have you ascertained that no contingent gains are recognised as income?

Yes/No

4)

(a)

Have you inquired about events occurring after balance sheet date?

Yes/No

(b)

Are any adjustments required to be made in accounts, relating thereto?

Yes/No

(c)

If not made, whether disclosed with quantification?

Yes/No

AS-5 — NET PROFIT/LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES

Prominent definitions includes; Ordinary activities are any activities which are undertaken by an enterprise as part of its business and such related activities in which the enterprise engages in furtherance of, incidental to, or arising from, these activities. Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly. Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. Accounting policies are the specific accounting principles and the methods of applying those principles adopted by an enterprise in the preparation and presentation of financial statements.

Accounting treatment and disclosures

Ordinary Activities : When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately.
Extraordinary Items should be disclosed in the statement of profit and loss as a part of net profit or loss for the period. The nature and the amount of each extraordinary item should be separately disclosed in the statement of profit and loss in a manner that its impact on current profit or loss can be perceived.
Prior Period : The nature and amount of prior period items should be separately disclosed in the statement of profit and loss in a manner that their impact on the current profit or loss can be perceived.
Accounting Estimate : The effect of a change in an accounting estimate should be included in the determination of net profit or loss in; (a) the period of the change, if the change affects the period only; or (b) the period of the change and future periods, if the change affects both.
Accounting Policy : Any change in an accounting policy which has a material effect should be disclosed. The impact of, and the adjustments resulting from, such change, if material, should be shown in the financial statements of the period in which such change is made, to reflect the effect of such change. Where the effect of such change is not ascertainable, wholly or in part, the fact should be indicated. If a change is made in the accounting policies which has no material effect on the financial statements for the current period but which is reasonably expected to have a material effect in later periods, the fact of such change should be appropriately disclosed in the period in which the change is adopted.
A change in accounting policy consequent upon the adoption of an Accounting Standard should be accounted for in accordance with the specific transitional provisions, if any, contained in that Accounting Standard. However, disclosures required by paragraph 32 of the Statement should be made unless the transitional provisions of any other Accounting Standard require alternative disclosures in this regard.
Where any policy was applied to immaterial items in any earlier period but the item is material in the current period, the change in accounting policy, if any, shall not be treated as a change in accounting policy and accordingly no disclosure is required e.g., gravity booked on cash basis in earlier period for relatively insignificant number of employees which in current period has become material and thus provided on basis of report of Actuary.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-5

(Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.)

1)

(a)

Has any of the following transaction/event taken place during the year

(i)

Write down/back of inventories?

Yes/No

(ii)

Restructuring Cost?

Yes/No

(iii)

Disposal of Fixed Assets?

Yes/No

(iv)

Disposal of long-term investments?

Yes/No

(v)

Legislative changes having retrospective application?

Yes/No

(vi)

Litigation Settlement?

Yes/No

(vii)

Reversal of Provisions?

Yes/No

(b)

If yes, are the same disclosed separately or by way of note?

Yes/No

(c)

If yes, are the same not considered as extraordinary items?

Yes/No

2)

(a)

Have you come across any extraordinary item of income or expense clearly distinct from ordinary activities of the enterprise?

Yes/No

(b)

Have you come across any income or expense, which has arisen due to error or omission in the preparation of financial statement of one or more prior periods?

Yes/No

(c)

If yes to either a or b, have the amount for each item disclosed separately in P and L A/c. in the manner that its impact on current profit/loss can be perceived?

Yes/No

3)

(a) Has the enterprise during the year revised any of its estimates?

Yes/No

(b)

If yes, and if such change has material effect in current period or subsequent period
whether the nature and amount of such change disclosed?

Yes/No

(c)

If no to (b) above, is the reason for non-quantification disclosed?

Yes/No

4)

(a)

Whether the enterprise has revised any accounting policies?

Yes/No

(b)

If yes, have you ensured that the change is required to be made because:

(i)

Of statute or

Yes/No

(ii)

For compliance with AS or

Yes/No

(iii)

Such change would result in a more appropriate presentation of the financial enterprise.

Yes/No

(c)

If the change in accounting policy has a material effect, whether such change is quantified so as to reflect the effect of such change?

Yes/No

(d)

If change in accounting policy, which is material and is not ascertainable whether such
fact is disclosed in notes?

Yes/No

(e)

If change in accounting policy has no material effect for the current period but is expected to have material effect in later periods, whether such change has been appropriately disclosed?

Yes/No

(f)

Is change in accounting policy arising upon adoption of an Accounting Standard made as
per AS-5, unless the transitional provisions of the other Accounting Standard requires
alternative disclosure?

Yes/No

AS-6 — DEPRECIATION ACCOUNTING

Allocate depreciable amount of a depreciable assets on systematic basis to each accounting year over useful life of asset, useful life may be reviewed periodically.
Basis must be consistently followed and disclosed. Any change to be quantified and disclosed.
Rates of depreciation should be disclosed.
A change in method followed be made only if required by the statute, compliance to Accounting Standard, appropriate preparation or presentation of the financial statement.
In cases of extension, revaluation or exchange fluctuation, depreciation to be provided on adjusted figure prospectively over the residual useful life of the asset.
Deficiency or surplus in case of transfer/change in method be disclosed.
Historical cost, depreciation for the year and accumulated depreciation be disclosed.
Revision in method of depreciation be made from date of use. Change in method of charging depreciation is change in accounting policy be disclosed.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-6

1)

Which method of depreciation is followed by the enterprise:

(a)

Straight line method?

Yes/No

(b)

Written down value method?

Yes/No

(c)

Any other method?

Yes/No

2)

(a)

Are the rates prescribed in Sch. XIV followed, to the extent that these are minimum rates?

Yes/No

(b)

If no, are higher rates followed?

Yes/No

(c)

If yes, whether disclosed the same in accounting policy?

Yes/No

3)

(a)

Whether, historical cost of Fixed Asset has undergone a change due to exchange
fluctuation?

Yes/No

(b)

If yes, whether depreciation on such amount provided prospectively over the residual
useful life of the asset?

Yes/No

4)

(a)

Is the method of providing depreciation changed during the year?

Yes/No

(b)

If yes, whether depreciation as per new method recalculated retrospectively?

Yes/No

(c)

If yes, whether deficiency/surplus adjusted in P and L A/c.?

Yes/No

(d)

Whether such change has been treated as a change in accounting policy and its effect quantified and disclosed so as to reflect the effect of such change in account as per AS-5?

Yes/No

5)

(a)

Have the fixed assets been revalued?

Yes/No

(b)

If yes, is depreciation provided based on

(i)

Revalued amount? and

Yes/No

(ii)

On the estimate of the remaining useful life of such asset?

Yes/No

(c)

If yes, how is the additional depreciation on revalued asset accounted

(i)

By charging to Profit and Loss Account?

Yes/No

(ii)

By recouping from revaluation reserve?

Yes/No

6)

Is addition/extension to existing asset (not retaining a separate identity) depreciated over
the remaining useful life of the asset?

Yes/No

7)

Is addition/extension to existing asset (retaining a separate identity) depreciated independent
of the original asset based on the assessment of it own useful life?

Yes/No

8)

In respect of Intangible Assets, whether amortisation is done as prescribed in AS-26?

Yes/No

AS-7 — ACCOUNTING FOR CONSTRUCTION CONTRACTS

It may be mentioned that the standard is applicable in accounting of contracts in the books of the contractor. It is not applicable for construction project undertaken by the entity on behalf of its own, for example, a builder constructing flats to be sold. It is also not applicable to Service Contracts which are not related to the construction of asset.
According to AS-7 (Revised) the enterprise should follow only percentage completion method.
Where in case the contract revenue or the stage of completion cannot be determined reliably, the cost incurred on the contract may be carried forward as work in progress. All foreseen losses must be fully provided for.
Under percentage of completion method, appropriate allowance for future contingencies shall be made.
WIP, receipt of progressive payments, advances, retentions, receivables and certain other items are required to be disclosed.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-7

1)

Is the enterprise involved in

(a)

Contracts for construction of dams, buildings, roads, ships, refineries, pipeline? or

Yes/No

(b)

Contracts for the rendering of services, directly related to the construction of the asset?

Yes/No

2)

If yes to 1 above, is revised AS-7 followed in respect of construction contracts entered into
on or after 1-4-2003?

Yes/No

3)

How many contracts at the year end are of:

(a)

Fixed Price Contracts? _______

(b)

Cost Plus Contracts? _______

4)

Are the following cost considered as direct cost to the contract cost?

(a)

Site labour cost?

Yes/No

(b)

Material costs used in construction?

Yes/No

(c)

Depreciation of machinery used for the contract?

Yes/No

(d)

Cost of moving machinery and materials to and from contract site?

Yes/No

(e)

Cost of hiring machinery for the contract?

Yes/No

(f)

Cost of design/technical assistance directly related to contract?

Yes/No

(g)

Estimated cost of

(i)

Rectification?

Yes/No

(ii)

Guarantee, including warranty costs?

Yes/No

(h)

Claims from third party relating to contract?

Yes/No

5)

Are following attributable cost, allocated to the contract costs?

(a)

Insurance on materials/machinery?

Yes/No

(b)

Construction overheads?

Yes/No

(c)

Interest cost (if permissible under AS-16)?

Yes/No

6)

Are the following cost excluded from contract costs

(a)

General administration cost for which reimbursement is not specified in the contract?

Yes/No

(b)

Selling cost?

Yes/No

(c)

Depreciation of idle plant not used for a particular contract?

Yes/No

7)

In recognising revenue under fixed price contract, are all the following conditions satisfied:

(a)

Total contract revenue can be measured reliably?

Yes/No

(b)

Both the contract costs to complete the contract and the stage of contract completion
at the reporting date can be measured reliably?

Yes/No

(c)

Contract costs can be clearly identified and measured reliably, so that actual cost incurred
can be compared with prior estimates?

Yes/No

8)

In recognising revenue under cost plus contract, can contract costs be clearly identified and
measured reliably?

Yes/No

9)

Is contract revenue in case of fixed price contract or cost plus contract recognised using the
percentage of completion method?

Yes/No

10)

Which of the following method is determined to ascertain the stage of completion of the contract?

(a)

The proportion of contract costs incurred bears to the estimated total contract costs?

Yes/No

(b)

Survey of worke performed?

Yes/No

(c)

Completion of physical proportion of the contract work?

Yes/No

11)

Are contract cost of following nature, recovery of which may not be probable, expensed as and when incurred?

(a)

Which are not enforceable (validity in question)?

Yes/No

(b)

Completion subject to pending litigation or legislation?

Yes/No

(c)

Relating to property likely to be condemned (forfeited) or expropriated (dispossessed)?

Yes/No

(d)

Where customer unable to meet obligation?

Yes/No

(e)

Where contractor unable to complete contract or meet obligations under contract?

Yes/No

12)

Is expected loss (when contract cost exceeds contract revenue) recognised as an expense, disregarding whether or not work has commenced on the contract or stage of completion of contract activity?

Yes/No

13)

Have the following been disclosed in the financial statements:

(a)

Amount of contract revenue recognised as income?

Yes/No

(b)

The methods used to determine contract revenue?

Yes/No

(c)

The method used to determine the stage of completion of contract-in-progress?

Yes/No

(d)

The aggregate amount of cost incurred and recognised profits/losses up to the reporting date?

Yes/No

(e)

The amount of advances received? and

Yes/No

(f)

The amount of retentions?

Yes/No

14)

Have the following been presented in the Balance Sheet:

(a)

Gross amount due from customers for contract work as an asset?

Yes/No

(b)

Gross amount due to customers for contract work as a liability?

Yes/No

AS-8 — ACCOUNTING FOR RESEARCH AND DEVELOPMENT

Salaries, wages, personnel costs, depreciation, cost of materials and services etc. related to research and development, payment to outside institutions, reasonable allocation of overhead costs and amortization of patents and licences be included in R & D cost, and be disclosed in Profit & Loss Account.
Such cost to be charged as an expense unless the product or process is separately identifiable. It may be then deferred for allocation in future years on systematic basis and to be separately disclosed in Balance Sheet and reviewed at the end of each accounting year. Once written off, it should not be reinstated.

It may be mentioned that the standard has been withdrawn w.e.f. 1-4-2004. The accounting provision of this standard are taken.

AS-9 — REVENUE RECOGNITION

Revenue from sales or service transactions should be recognised when the requirements as to performance as set out are satisfied, provided that at the time of performance it is not unreasonable to expect ultimate collection. If at the time of raising of any claim it is unreasonable to expect ultimate collection, revenue recognition should be postponed.
In a transaction involving the sale of goods, performance should be regarded as being achieved when the following conditions have been fulfilled: (i) the seller of goods has transferred to the buyer the property in the goods for a price or all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with ownership; and (ii) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.
In a transaction involving the rendering of services, performance should be measured either under the completed service contract method or under the proportionate completion method, whichever relates the revenue to the work accomplished.
Such performance should be regarded as being achieved when no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering the service.
Revenue arising from the use of other enterprise resources yielding interest, royalties and dividends should only be recognised when no significant uncertainty as to measurability or collectability exists. These revenues are recognised on the following bases:

Interest: on a time proportion basis taking into account the amount outstanding and the rate applicable.

Royalties: on an accrual basis in accordance with the terms of the relevant agreement.

Dividends from investments in shares: when the owner’s right to receive payment is established.

Disclosure

In addition to the disclosures required by Accounting Standard 1 on ‘Disclosure of Accounting Policies’ (AS-1), an enterprise should also disclose the circumstances in which revenue recognition has been postponed pending the resolution of significant uncertainties.
In cases where revenue cycle of the entity involves collection of excise duty the enterprise is required to disclose revenue at gross as reduced by excise amount thereby finally arriving net sales on the face of the profit and loss account.
The standard is followed by an appendix that though is not part of the Standard, illustrate the application of the Standard to a number of commercial situation deals with various situations in an endeavour to assist in clarifying application of the Standard.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-9

1)

In case of sale of goods whether the revenue is recognised only when all significant risk and rewards of ownership have been transferred to the buyer and the enterprise has retained no effective control of the goods transferred?

Yes/No

2)

In case of rendering of services, whether the revenue is recognised on:

(a)

Completed service contract method? or

Yes/No

(b)

Proportional completion method?

Yes/No

3)

In case of Interest, Royalties and Dividends, whether the revenue recognised as under:

(a)

Interest on time basis?

Yes/No

(b)

Royalties in accordance with terms of agreement?

Yes/No

(c)

Dividend from investments in share when right to receive established?

Yes/No

4)

(a)

Have you ascertained that when significant uncertainty exists as to the consideration or measurability, the revenue recognition is postponed and shall be recognised as revenue of the period in which the uncertainty is resolved?

Yes/No

(b)

Have you ascertained that adequate provision is made for expenses to be incurred for future when revenue has been fully recognised in accounts; e.g., warranties on product sold, services to be rendered for which full fees collected etc.?

Yes/No

5)

(a)

Is revenue recognised on accrual basis?

Yes/No

(b)

If revenue recognition is postponed, the circumstance for such postponement has been disclosed?

Yes/No

6)

Is excise duty, paid on goods sold disclosed on the face of profit & loss statement by way of
deduction from turnover/sales?

Yes/No

AS-10 — ACCOUNTING FOR FIXED ASSETS

The cost of a fixed asset should comprise its purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Self-constructed asset shall be accounted at cost.
In case of exchange of asset, fair value of asset acquired or the net book value of asset given up whichever is more clearly evident shall be considered.
Revaluation is permitted provided it is done for the entire class of assets. The basis of revaluation should be disclosed.
Increase in value on revaluation shall be credited to Revaluation Reserve while the decrease should be charged to Profit and Loss Account.
Goodwill to be accounted only when paid for.
Assets acquired on hire purchase shall be recorded at its fair value.
Gross and net book values at beginning and end of year showing additions, deletions and other movements is required to be disclosed.
Assets should be eliminated from books on disposal or when of no utility value.
Profit/loss on disposal be recognised on disposal to Profit and Loss Account.
Machinery spares that can be used only in conjunction of specific asset shall be capitalised.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-10

1)

In case of capitalisation of Fixed Assets whether the following is included in cost:

(a)

Purchase price including import duty and other non-refundable taxes or levies (capital MODVAT if availed then excluded from cost)?

Yes/No

(b)

Interest cost (net of income, if any) specific/general borrowing capitalised?

Yes/No

(c)

Administrative and other general overheads excluded?

Yes/No

(d)

Expenditure on test-runs and experimental production till commercial production?

Yes/No

(e)

However, if commercial production prolonged, then expenses incurred after plant ready
to commence commercial production charged to P and L A/c?

Yes/No

2)

Whether only those expenses, incurred on existing assets, which increase capacity have been capitalised?

Yes/No

3)

In case of following Fixed Assets, is their treatment in conformity with AS:

(a)

Hire purchase/Assets taken on lease accounted as per AS-19?

Yes/No

(b)

Joint ownership, adequate disclosure given in Balance Sheet?

Yes/No

(c)

Consolidated price apportioned to various assets?

Yes/No

(d)

Goodwill recorded, paid for (AS 26) or arising on merger (AS 14) and as a prudent
policy written-off over a period?

Yes/No

(e)

Patents and know-how accounted as per AS-26?

Yes/No

4)

If assets are revalued, whether

(a)

Revaluation is of entire class? or

Yes/No

Whole class of assets within a unit?

Yes/No

(b)

Revalued amount presented in financial statement by

(i)

Restating both gross book value and accumulated depreciation? or

Yes/No

(ii)

Adding the net increase on account of revaluation to net book value?

Yes/No

(c)

Disclosure in accounting policy is made of

(i)

Method adopted to compute the revalued amount?

Yes/No

(ii)

Nature of indices used?

Yes/No

(iii)

Year of appraisal made? and

Yes/No

(iv)

External valuer involved?

Yes/No

5)

Whether Fixed Assets retired from active use and held for disposal:

(i)

Stated at lower of net book value and net realisable value? and

Yes/No

(ii)

Shown separately as part of other current asset?

Yes/No

6)

Whether

(i)

Critical or stand-alone spares connected with specific fixed assets and whose use is
expected to be irregular is written off over the useful life of the Fixed Asset?

Yes/No

(ii)

Whether any replacement of above is charged as repairs in the profit and loss account?

Yes/No

AS-11 (REVISED) — ACCOUNTING FOR EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

Applicable to all enterprises for which accounting period commences on or after 1-4-2004. It is applicable to transactions in foreign currency and translating financial statements of foreign subsidiary/branches.
Monetary items denominated in Foreign Currency shall be reported using closing rates.
Non monetary items carried in terms of historical cost in foreign currency shall be reported at the exchange rate on the date of the transaction.
Exchange differences shall be recognised as income/expenses in the period in which they arise except in case of fixed assets and differences on account of forward contracts.
Translation of foreign exchange transaction of revenue items except opening/closing inventories and depreciation shall be made by applying rate at the date of the transactions. For convenience purposes an average rate or weighted average rate may be used, provided it approximates the rate of exchange. Opening and closing inventories shall be translated at rates prevalent on opening and closing dates, respectively and depreciation amount shall be converted by applying the rate used for translation of the asset.
Translation gains and losses for branches/subsidiaries forming integral part of operations of the entity shall be accounted as stated in above. However translation gains and losses for non-integral operations shall be directly credited to reserves. It may be mentioned that that the method of arriving translation gains or losses shall be different from that stated above; i.e., all assets and liabilities are converted at closing rates and revenue items are converted at average rates, where it approximates the rates at the date of transactions. Integral foreign operation is a foreign operation, the activities of which are an integral foreign operation is a foreign operation, the activities of which are an integral part of those of the reporting enterprise.
Exchange differences arising on repayment of liabilities incurred for purchase of fixed assets shall be expensed through profit and loss account. {Note, in case of a Company (read as required by Schedule VI), where the fixed asset is purchased from outside India, the related exchange gains and loss, if any, are required to be capitalized}. Also in case of a company, other exchange differences arising out of long term monetary items can be initially deferred and later amortized over the period upto March 31, 2011 or the life of the related long term monetary asset whichever is lower with corresponding adjustments in balance sheet through "Foreign Currency Monetary Item Translation Difference Account"
Gains or losses on accounting of forward contracts is recognised through profit and loss account (unless it relates to fixed assets as described in above for a Company).

However, measurement of gains or losses on forward contract depends upon the intention for which it is taken. Where it is not for trading or speculative purposes the premium/discount is amortised over the term of the contracts. Where these are held for either speculative or trading purposes, the gain or loss is arrived at each reporting date after comparing the FAIR VALUE of contact for its remaining term of maturity with the carrying amount at the reporting date.
Profit/Loss on cancellation or renewal of forward exchange contract shall be recognised as income/expenses of the respective period (unless it relates to fixed assets as described in above for a Company)..
Amount of exchange difference included in Profit & Loss Account adjusted in carrying forward or amount of fixed assets or due to forward contracts recognised in Profit & Loss Account for one or more accounting period must be disclosed.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-11

1)

In case of transactions in foreign currency, how are the following accounted;

(a)

In respect of transactions in foreign currency entered on or before 31-3-2004, whether
AS-11 (1994) followed?

Yes/No

(b)

In respect of transactions in foreign currency entered on or after 1-4-2004 whether
AS-11 (2003) followed?

Yes/No

2)

(a)

Whether cash flows arising from transaction in a foreign currency and the translation of
cash flow of a foreign operation in cash flow statement is presented as per AS-3?

Yes/No

(b)

Whether exchange differences arising from foreign borrowings to the extent that they are
regarded as an adjustment to interest cost is presented as per AS-16?

Yes/No

3)

Whether the initial transaction is recorded at:

(a)

Transaction date? or

Yes/No

(b)

Average rate of week or month if more transactions?

Yes/No

4)

At the reporting date; i.e., Balance Sheet date, are all monetary assets/liabilities (including the
following) recorded at closing rate, i.e amount likely to be realised,: or

Yes/No

(a)

Cash and Bank Balances?

Yes/No

(b)

Receivables?

Yes/No

(c)

Payables?

Yes/No

5)

At the reporting date; i.e., Balance Sheet date are all non-monetary assets/liabilities recorded at
rates prevailing on transaction date, like;

(a)

Investments?

Yes/No

(b)

Inventories?

Yes/No

(c)

Fixed Assets?

Yes/No

(d)

Depreciation?

Yes/No

(e)

Equity?

Yes/No

6)

Are exchange differences arising on the settlement of monetary items or on reporting an enterprise’s monetary items at rates different from those at which they are initially recorded during the period or reported in previous financial statements, recognised as income or as expense in the period in which they arise?

Yes/No

7)

If non-monetary item is subsequently measured at fair value or net realisable value, is the exchange
rate taken on the date when such fair value or net realisable value determined?

Yes/No

8)

(a)

Whether exchange differences arising on a monetary item that forms a net investment in a
non-integral foreign operation is accumulated in a foreign currency transaction reserve in
the financial statements?

Yes/No

(b)

On disposal of the net investment in non-integral foreign operation, is the accumulated
foreign currency transaction reserve recognised as income or an expense in the profit & loss statement?

Yes/No

9)

In the consolidated financial statements, wherein non-integral foreign operation is incorporated
are the,

(a)

Assets and liabilities both monetary and non-monetary of the non-integral foreign operations
translated at the closing rate?

Yes/No

(b)

Income and expense items of the non-integral foreign operation translated at exchange rate
at the dates of the transaction (note, average exchange rates during the period if approximates the exchange rates at the date of transaction, may be used)?

Yes/No

(c)

Resulting exchange differences accumulated in a foreign currency translation reserve until the
disposal of the net investment?

Yes/No

10)

(a)

Is the liability or asset outstanding at the reporting date converted using the exchange rate
prevailing on that date?

Yes/No

(b)

Exchange difference arising out of the forward exchange contracts undertaken to hedge the
foreign currency risk of a firm commitment or a highly probable forecast transaction accounted
when the transactions gets settled?

Yes/No

11)

Have the following been disclosed as required by the Accounting Standard:

(a)

Amount of exchange differences included in the net profit or loss for the period?

Yes/No

(b)

(i)

Net exchange differences accumulated in foreign currency translation reserve.

Yes/No

(ii)

Any amount of such exchange differences at the beginning and end of the period?

Yes/No

(c)

When the reporting currency is different from the currency of the country in which the enterprise is domiciled, along with the reason for using a different currency?

Yes/No

(d)

when there is a change in the classification of a significant foreign operation, the nature of
change in classification, reason for the change, the impact of the change in classification on
shareholders’ funds and the impact on net profit or loss for each prior period presented had
the change in classification occurred at the beginning of the earliest period presented?

Yes/No

AS-12 — ACCOUNTING FOR GOVERNMENT GRANTS

Grants should not be recognised unless reasonably assured to be realised. Grants towards specific assets be presented as deduction from its gross value. Alternatively, be treated as deferred income in Profit & Loss Account on rational basis over the useful life of the asset when depreciable. For non-depreciable asset requiring fulfilment of any obligations, it be credited to Profit & Loss Account during the concerned period to fulfil obligations.
Balance of deferred income be disclosed appropriately as to promoter’s contribution, be credited to capital reserves and considered as shareholders’ funds
Grants in the form of non monetary assets given at concessional rate be accounted at their acquisition cost. Asset given free of cost be recorded at nominal value.
Grants receivable as compensation of losses/expenses incurred be recognised and disclosed in Profit & Loss Account in the year it is receivable and shown as extraordinary item if appropriately read with AS-5.
Contingency related to grant be treated in accordance with AS-4. Grants when become refundable, be shown as extraordinary item read with AS-5.
Grants related to revenue on becoming refundable be adjusted first against unamortised deferred credit balance of the grant and then be charged to Profit & Loss Account.
Grants against specific assets on becoming refundable be recorded by increasing the value of the respective assets or by reducing Capital Reserve/Deferred Income balance of the grant.
Grant to promoter’s contribution when refundable be reduced from the Capital Reserve.
Accounting policy adopted for grants including method of presentation, extent of recognition in financial statements, at concession/free of cost be disclosed.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-12

1)

How are the Government grants and grants received from similar bodies, in financial statements presented for the following:

(a)

Fixed Assets

(i)

Is the grant amount deducted from the gross value of concerned asset? or

Yes/No

(ii)

In case of depreciable asset is it treated as deferred income and recognised in P and L
Statement over the period and in proportion in which depreciation is charged?

Yes/No

(iii)

In case of non-depreciable asset is it credited to capital reserve?

Yes/No

(b)

Revenue is grant shown under other income? or deducted from related expenses?

Yes/No

(c)

Promoters contribution in such grants credited to capital reserve?

Yes/No

(d)

Non-monetary assets is such asset received at free of cost, recorded at nominal value?

Yes/No

2)

Refund of Government grants:

(a)

Whether refund of Government grant treated as extraordinary item in Financial Statement?

Yes/No

(b)

In respect of grant related to specific fixed asset, is

(i)

Book value of assets increased? or

Yes/No

(ii)

Capital reserve reduced? or

Yes/No

(iii)

Deferred income balance reduced?

Yes/No

(c)

In respect of Revenue grants

-

If any unamortised deferred credit available whether refund adjusted there against?

Yes/No

-

If no deferred credit balance available, whether charged to P and L Statement?

Yes/No

(d)

In respect of promoters contribution whether capital reserve balance reduced?

Yes/No

3)

At the time of recognising Government grants, whether the enterprise:

(a)

Has complied with the conditions attached to the grant? and

Yes/No

(b)

Is reasonably certain for the ultimate collection of such benefits earned?

Yes/No

4)

Have the following disclosures been made:

(a)

Regarding accounting policy adopted for Government grants including methods of presentation in financial statement?

Yes/No

(b)

The nature and extent of Government grants including non-monetary assets received at
concessional rate or free of cost?

Yes/No

AS-13 — ACCOUNTING FOR INVESTMENTS

Current investments and long-term investments shall be disclosed distinctly with further sub-classification.
Cost of investment to include acquisition charges, e.g., brokerage, fees and duties.
Current investments shall be disclosed at lower of costs and fair value.
Long-term investments shall be disclosed at cost.
Provision for decline (other than temporary) to be made.
Adequate disclosure is required for: the accounting policy adopted — classification of investments — income from investments, profit/loss on disposal and changes in carrying amount of such investment — aggregate amount of quoted and unquoted investments giving aggregate market value of quoted investments.
Significant restrictions on right of ownership, realisation of investment and remittance of income and proceeds of disposal thereof be disclosed.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-13

1)

Is the accounting policy for determining the carrying amount of investments disclosed?

Yes/No

2)

Are investments classified into

(a)

Current investments?

Yes/No

(b)

Long-term investments?

Yes/No

3)

Are investments

(a)

Verified/confirmed? and

Yes/No

(b)

Further classified as per requirement of Schedule VI to the Companies Act, 1956?

Yes/No

4)

Are current Investments carried at the lower of cost and fair value

(a)

On individual basis? or

Yes/No

(b)

Category of investment?

Yes/No

5)

In case of long-term investments

Whether provisions made for diminution other than temporary in value of each investments individually?

Yes/No

6)

Whether the following disclosed in P and L A/c.

(a)

Interest, dividend and rental on investments shown separately under long-term and current
investments?

Yes/No

(b)

Profit or Loss on disposal of current and long-term investment and changes in the carrying
amount of such investments?

Yes/No

AS-14 — ACCOUNTING FOR AMALGAMATION

The Accounting Standard is applicable only where it is made in pursuant to a scheme sanctioned by statute.
The accounting method to be adopted depends whether the amalgamation is in the nature of merger or not as defined in para 3(e) of the Standard. The definitions list out five criteria, all of which must be satisfied for an amalgamation to be accounted on the basis of "Pooling of Interest Method". If any criterion is not met then the amalgamation is accounted on by using "Purchase Method". It may be mentioned that these criteria relates to mode of payment of consideration of merger, shareholding pattern pre and Post Merger, intention to carry-on business after the merger, pooling of all assets and liabilities after the merger and an intention to continue to carry the carrying amounts of assets and liability after the merger.
Under Purchase Method, all assets and liabilities of the transferor company is recorded either at existing carrying amount or consideration is allocated to individual identifiable assets and liabilities on basis of its fair values at date of amalgamation. The excess or shortfall of consideration over value of net assets is recognised as goodwill or capital reserve.
Under the Pooling of Interest Method, assets, liabilities and reserves of the transferor company be recorded at existing carrying amount and in the same form as on date of amalgamation. In case of conflicting accounting policies existing in transferor and transferee company a uniform policy be adopted on amalgamation, as per AS-5.
Certain specific disclosures as discussed in the questionnaire below are required to be made in financial statements after amalgamation. In case of amalgamation effected after Balance Sheet date but before issue of financial statements of either party, the event be only specifically disclosed and not given effect in such statements.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-14

1)

Is the amalgamation:

(a)

In nature of merger? or

Yes/No

(b)

In nature of purchase?

Yes/No

2)

(a)

Is goodwill arising out of amalgamation?

Yes/No

(b)

If yes, whether such goodwill is amortised over a period not exceeding five years?

Yes/No

3)

(a)

Whether treatment to be given to reserves of transferor company is specified in scheme of amalgamation?

Yes/No

(b)

If different treatment is prescribed in scheme as compared to the requirements of AS, are following disclosures made in the financial statements?

(i)

Description of the accounting treatment given to the reserves and the reasons for following the treatment different from that prescribed in the statement.

Yes/No

(ii)

Deviations in the accounting treatment given to the reserves as prescribed by the scheme of amalgamation sanctioned under the statute as compared to the requirements of this statement that would have been followed had no treatment been prescribed by the scheme

Yes/No

(iii)

The financial effect, if any arising due to such deviation.

Yes/No

4)

Whether following disclosures made in first financial statement following amalgamation:

(a)

Name and general nature of business of amalgamating companies?

Yes/No

(b)

Effective date of amalgamation?

Yes/No

(c)

Method of accounting used to reflect amalgamation

Yes/No

(d)

Particulars of the scheme sanctioned under the Companies Act, 1956?

Yes/No

5)

If amalgamation under pooling of interest method, whether additional disclosure made in first financial statement following the amalgamation of the following:

(a)

Description and number of shares issued, together with percentage of equity share exchanged to effect amalgamation?

Yes/No

(b)

Amount of any difference between the consideration and the value of net identifiable asset acquired and the treatment thereof?

Yes/No

6)

If amalgamation in nature of purchase, whether additional disclosure made in the first financial statement following the amalgamation of the following:

(a)

Consideration for the amalgamation and a description of the consideration paid or contingently payable?

Yes/No

and

(b)

The amount of any difference between the consideration and the value of net identifiable assets acquired, and the treatment thereof including the period of amortisation of any goodwill arising on amalgamation?

Yes/No

AS-15 — ACCOUNTING FOR RETIREMENT BENEFITS IN THE FINANCIAL STATEMENT OF EMPLOYERS

The method of accounting of retirement benefits depends on the nature of retirement benefits and in practice it may not be incorrect to say that it also depends on the mode of funding.
On the basis of nature, a retirement benefit scheme can be classified either as defined benefit plan or defined contribution plan.

Defined contribution schemes are schemes where the amounts to be paid as retirement benefits are determined by contributions to a fund together with earnings thereon; .eg., provident fund schemes. Defined benefit schemes are retirement benefit schemes under which amounts to be paid as retirement benefits are determinable usually by reference to employee’s earnings and/or years of service; e.g., gratuity schemes.

For defined contribution schemes, contribution payable by employer is charged to Profit & Loss Account.

For defined benefit schemes, accounting treatment will depend on the type of arrangements which the employer has made.
If payment for retirement benefits is made out of employers funds, appropriate charge to Profit & Loss Account to be made through a provision for accruing liability, calculated according to actuarial valuation.
If liability for retirement benefit is funded through creation of trust, the excess/shortfall of contribution paid against amount required to meet accrued liability as certified by actuary is treated as pre-payment or charged to Profit & Loss Account.
If liability for retirement benefit is funded through a scheme administered by an insurer, an actuarial certificate or confirmation from insurer is obtained. The excess/shortfall of the contribution paid against the amount required to meet accrued liability as confirmed by insurer is treated as pre-payment or charged to Profit & Loss Account.
Any alteration in the retirement benefit cost should is charged or credited to Profit & Loss Account and change in actuarial method is to be disclosed.
Financial statements to disclose method by which retirement benefit cost have been determined.

The institute has issued AS-15 which is broadly on lines of IFRS-19. It is applicable for accounting periods commencing after December 7, 2007. The Standard improves the existing practices mainly in the following areas.

—	It is broad in its applicability as it covers all short-term and long term employee benefits. For example, annual paid leave (though not encashable), long-term service rewards, subsidised goods or services, etc are also covered
—	Additional disclosures are required in relation to any defined benefits plans including:
	(i)	The reconciliation of (opening to closing) of Projected Benefit Obligation.
	(ii)	The reconciliation of (opening to closing) of Fair Value of Plan Assets.
	(iii)	The reconciliation of (opening to closing) of Net Liability/Prepaid Asset.
	(iv)	Components of charge during the year.
	(v)	Principal actuarial assumptions.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-15

1.

The standard is applicable to all kinds of employee benefits (except share based payments), inclulding:

Yes/No

a.

Salaries

b.

Bonus

c.

Provident Fund

d.

Superannuation

e.

Pension

f.

Gratuity

g.

Compensated absences; i.e., Leave Accruals (not only encashment)

h.

Post retirement health and welfare schemes?

i.

Termination Benefits

j.

Etc.

2.

Are the employee benefits classified into; Yes/No

a.

Short-term benefits

b.

Post employment benefits

i.

Defined Contribution Plans (DCP)

ii.

Defined Benefit Plans (DBP)

c.

Termination benefits

d.

Other Long-term benefits

3.

Are only those benefits, that are payable within twelve months of the balance date, included in
short term benefits. (Note, generally measurement of such transaction does not pose significant difficulty in recording the transaction. Moreover, undiscounted amounts are recorded)?

Yes/No

4.

Is the classification of post employment benefits into DCP or DBP based on the criteria ie whether the investment risk or actuarial risk falls back on the employer, if yes the plan is DBP or else it is DCP?

Yes/No

5.

Is the measuring of cost of DCP based on contribution due during the period?

Yes/No

6.

Is the measurement of cost of DBP based on actuarial valuation principles as elaborated in AS 15R. Though the valuation is not required at each balance sheet date, the same is encouraged due to complexity involved in measuring the cost. To elaborate a bit;?

Yes/No

a.

The concept of plan asset allow only those fund balance to be considered that are legally
separate from the enterprise and are not available to creditors of the entity even in case
of bankruptcy

b.

The concept of return on plan asset requires even unrealized holding gains to be included
after deducting administration cost, both being computed net of impact of taxes on income

c.

The discount rate that could be used will be close to the yields that are witnessed for
Government of India Bonds for comparable period of maturity

d.

Elaborate, reconciliation are required to be disclosed, like;

i.

Reconciliation of Projected Benefit Obligation

ii.

Reconciliation of Plan Assets

iii.

Reconciliation of Net Liability/Assets

iv.

Break-up of Net Periodic Cost (to tally with those in above)

7.

Are VRS included in Termination benefits?

Yes/No

8.

Is VRS expenditure written off when incurred (note this part of standard as far as it related to
termination benefits, the application date is deferred to April 1, 2009)?

Yes/No

9.

Is the measurement of termination benefits based on number of employees that has accepted the VRS scheme?

Yes/No

10.

Are the transitional provisions applied in accordance with the standards?

Yes/No

11.

Are the disclosures made in accordance with standard including; ?

Yes/No

a.

A brief description of retirement benefit plans

b.

The impact of transitional provisions

c.

The reconciliations as mentioned in above

d.

Discount rates, rates for increase in compensation,

e.

The net cost charged in Profit and Loss account, etc.

AS-16 — BORROWING COSTS

• Borrowing costs that are directly attributable to the acquisition, construction or production of any qualifying asset (assets that takes a substantial period of time to get ready for its intended use or sale) should be capitalised.

• Borrowing costs that can be capitalised are interest and other costs that are directly attributable to the acquisition, construction and production of a qualifying asset.

• Income on the temporary investment of the borrowed funds to be deducted from borrowing costs.

• Capitalisation of borrowing costs should be suspended during extended periods in which development is interrupted.

• Capitalisation should cease when completed substantially or if completed in parts, in respect of that part, all the activities for its intended use or sale are complete.

• Statement does not deal with the actual or imputed cost of owner’s equity/preference capital are treated as borrowing costs.

• Financial statements to disclose accounting policy adopted for borrowing cost and also the amount of borrowing costs capitalised during the period.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-16

1)

(a)

Is the enterprise in the process of

(i)

Setting-up capital project?

Yes/No

(ii)

Manufacturing inventories.

Yes/No

(b)

Is time required for (a) above twelve months or more?

Yes/No

(c)

If no to (b) above, is borrowing cost expensed in the period in which they are incurred?

Yes/No

2)

Are any specific borrowings costs, including of following nature made by enterprise for (1) above

(a)

Interest and commitment charges?

Yes/No

(b)

Amortisation of discounts or premium to borrowing?

Yes/No

(c)

Ancillary costs in connection with borrowings?

Yes/No

(d)

Finance charges in respect of assets acquired under finance lease?

Yes/No

(e)

Exchange difference arising from foreign currency borrowing regarded as interest costs?

3)

(a)

Is expenditure incurred on (2) above capitalised as part of the cost of the asset?

Yes/No

(b)

Is any income earned on temporary investments out of specific borrowings deducted from the borrowing costs incurred?

Yes/No

4)

(a)

Are any general borrowings utilised for any of (1) above?

Yes/No

(b)

If yes, is interest worked out on weighted average of borrowing cost (other than specific borrowing capitalised) for the purpose of capitalisation?

Yes/No

5)

Are all the following conditions being fulfilled, when borrowing costs is being capitalised?

(a)

Expenditure for the asset is being incurred.

Yes/No

(b)

Borrowing cost is being incurred.

Yes/No

(c)

Activities to prepare the asset for its intended use or sale are in progress.

Yes/No

6)

Is capitalisation of borrowing cost suspended during the period when active development is interrupted without any technical or administrative reason?

Yes/No

7)

Is capitalisation of borrowing cost ceased when substantially all the activities relating to the asset are completed?

Yes/No

8)

Are the following disclosure made in the financial statements?

Yes/No

(a)

The accounting policy adopted for borrowing costs and

Yes/No

(b)

The amount of borrowing costs capitalised during the period.

Yes/No

AS-17 — SEGMENT REPORTING

Requires reporting of financial information about different types of products and services an enterprise provides and different geographical areas in which it operates.
A business segment is distinguishable component of an enterprise providing a product or service or group of products or services that is subject to risks and returns that are different from other business segments.
A geographical segment is distinguishable component of an enterprise providing products or services in a particular economic environment that is subject to risks and returns that are different from components operating in other economic environments.
Internal financial reporting system is normally the basis for identifying the segments.
The dominant source and nature of risk and returns of an enterprise should govern whether its primary reporting format will be business segments or geographical segments.
A business segment or geographical segment is a reportable segment if (a) revenue from sales to external customers and from transactions with other segments exceed 10% of total revenues (external and internal) of all segments; or (b) segment result, whether profit or loss is 10% or more of (i) combined result of all segments in profit or (ii) combined result of all segments in loss whichever is greater in absolute amount; or (c) segment assets are 10% or more of all the assets of all the segments.
If total external revenue attributable to reportable segment constitutes less than 75% of total revenues then additional segments should be identified.
Under primary reporting format for each reportable segment the enterprise should disclose external and internal segment revenue, segment result, amount of segment assets and liabilities, cost of fixed assets, acquired, depreciation, amortisation of assets and other non-cash expenses.
Reconciliation between information about reportable segments and information in financial statements of the enterprise is also to be provided.
Secondary segment information is also required to be disclosed. This includes information about revenues, assets and cost of fixed assets acquired.
When primary format is based on geographical segments, certain further disclosures are required.
Disclosures are also required relating to intra-segment transfers and composition of the segment.
In case, by applying the definitions of ‘business segment’ and ‘geographical segment’, contained in AS-17, it is concluded that there is neither more than one business segment nor more than one geographical segment, segment information as per AS-17 is not required to be disclosed.
It may be mentioned that the illustrative disclosure attached to Standard as appendix (though not forming part of the Standard) illustrate in detail; determination of reportable segments, information about business segments and summary of required disclosures.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-17

1)

(a)

Is the company a level I enterprise as per the criteria for classification of enterprise?

Yes/No

(b)

If yes, is segment reporting made in financial statements ?

Yes/No

2)

Is the financial reporting to the BOD/CEO based on:

(a)

Products or Services? or

Yes/No

(b)

Geographic areas?

Yes/No

3)

If answer is 2(a) is:

(a)

Primary reporting by products or services? and

Yes/No

(b)

Secondary reporting by geographical segment?

Yes/No

4)

If answer is 2(b) is:

(a)

Primary reporting by geographical segment? and Yes/No

(b)

Secondary reporting by products or services? Yes/No

5)

If answer to (2) is not obtained, whether the enterprise determines the risk and returns more related to:

(a)

Products and Services? or

Yes/No

(b)

Geographic areas in which it operates?

Yes/No

6)

Having identified segment reporting into business or geographical segment, are the following identified thereafter?

(a)

Segments where revenue is 10% or more both from internal and external sales.

Yes/No

(b)

Segments where profit or loss is 10% or more of combined results of the segment in
relation to profit or loss whichever is greater in absolute amount.

Yes/No

(c)

Segment where assets are 10% or more of the total assets of all segments.

Yes/No

7)

(a)

Do all the reportable segment put together constitute more than 75% of the total enterprise revenue?

Yes/No

(b)

If no, has management identified additional segment/s even if that segment do not meet 10% criteria, such that at least 75% of total enterprise revenue is reported in reportable segment?

Yes/No

8)

Are the disclosure of the reportable segments made in compliance with the requirement of Accounting Standards?

Yes/No

AS-18 — RELATED PARTY DISCLOSURES

Parties are considered to be related if, at any time during the reporting period, one party has ability to control or exercise significant influence over the other party in making financial and/or operating decisions.
The statement deals with following related party relationships: (a) Enterprises that directly or indirectly, through one more intermediaries, control or are controlled by or are under common control with the reporting enterprise (b) Associates, Joint Ventures of the reporting entity, investing party or venturer in respect of which reporting enterprise is an associate or a joint venture, (c) Individuals owning voting power giving control or significant influence over the enterprise and relatives of any such individual, (d) Key management personnel and their relatives, and (e) Enterprises over which any of the persons in (c) or (d) are able to exercise significant influence. Other relationship is not covered by this Standard.
Following are not deemed related parties (a) Two companies simply because of common director, (b) Customer, supplier, franchiser, distributor or general agent merely by virtue of economic dependence; and (c) Financiers, trade unions, public utilities, government departments and bodies merely by virtue of their normal dealings with the enterprise.
Disclosure under the Standard is not required in the following cases (i) If such disclosure conflicts with duty of confidentially under statute, duty cast by a regulator or a component authority; (ii) In consolidated financial statements in respect of intragroup transactions, and (iii) In case of State-controlled enterprises regarding related party relationships and transactions with other State-controlled enterprises.
Relative (in relation to an individual) means spouse, son, daughter, brother, sister, father and mother who may be expected to influence, or be influenced by, that individual in dealings with the reporting entity.
Standard also defines inter alia control, significant influence, associate, joint venture and key management personnel.
If there are transactions between the related parties, during the existence of relationship, certain information is to be disclosed, viz.; name of the related party, description of the nature of relationship, nature of transaction and its volume (as an amount or proportion), other elements of transaction if necessary for understanding, amount or appropriate proportion outstanding pertaining to related parties, provision for doubtful debts from related parties, amounts written off or written back in respect of debts due from or to related parties.
Names of the related party and nature of related party relationship to be disclosed even where there are no transactions but the control exists.
Items of similar nature may be aggregated by type of the related party.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS 18

1)

(a)

Is the company a level I enterprise as per the criteria for classification of enterprise?

Yes/No

(b)

If yes, is related party disclosures made in financial statements?

Yes/No

2)

Have the following been listed out?

(a)

Holding company/ies?

Yes/No

(b)

Subsidiary company/ies?

Yes/No

(c)

Fellow subsidiary/ies?

Yes/No

(d)

Person able to appoint or remove all or majority of directors of the reporting enterprise or vice versa?

Yes/No

(e)

Person who has substantial interest in voting power (20% or more) and power to direct by statute or agreement the financial and/or operating policies of the reporting enterprise and vice versa?

Yes/No

3)

Have the following been listed out:

(a)

Associates (two ways)?

Yes/No

(b)

Joint ventures (two ways)?

Yes/No

(c)

(i)

Individuals, directly or indirectly having voting power to control or significantly
influence over the reporting enterprise? and

Yes/No

(ii)

Relatives of any such individual?

Yes/No

(d)

(i)

Key management personnel? and

Yes/No

(ii)

Relatives of such personnel?

Yes/No

(e)

Enterprises owned or significantly influenced by individuals or their relatives, who have direct or indirect control or significant influence over the reporting enterprise?

Yes/No

(f)

Enterprises owned or significantly influenced by key management personnel or their relatives?

Yes/No

4)

Is the following disclosure made in financial statements.

Yes/No

(a)

Name of related party as appearing in 1 above even though no transaction has taken place during the period?

Yes/No

(b)

If transactions have taken place during the period with parties listed in either 1 or 2 of above,

(i)

The name of the transacting related party?

Yes/No

(ii)

Description of the relationship?

Yes/No

(iii)

Description of the nature of transaction?

Yes/No

(iv)

Volume of transaction in amount?

Yes/No

(v)

Outstanding amount of year end and provision made for doubtful debts relating thereto?

Yes/No

(vi)

Amount written off or written back in the period in respect of such due from or to such parties?

Yes/No

(vii)

Any other item of transaction (e.g interest free loans, no repayment period, use of group trademarks, etc.) necessary for an understanding of the financial statement?

Yes/No

5)

If disclosure for 4(b) not made partywise, are items of similar nature disclosed in aggregate by type of related

Yes/No

AS-19 — LEASES

The Standard applies in accounting for all leases other than —

lease agreements to explore for or use natural resources,

licensing agreements for items such as motion pictures, films, video recordings plays etc. and

lease agreements to use lands.

Leases are classified as finance lease or operating lease.

A finance lease is defined to mean a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Examples of situations which normally lead to a lease being classified as a finance lease are —

lessor transferring the ownership at the end of the lease term,

lessee has an option to purchase the asset at a price which is sufficiently lower than the fair value at the date the option becomes exercisable,

lease term is for substantial part of economic life of the asset,

present value of minimum lease payment at the inception of the lease is substantially equal to the assets fair value and

the asset leased is of specialised nature such that only lessee can use it without major modifications made to it.

An operating lease is defined to mean a lease other than a finance lease.

Treatment in the books of lessee

In case of finance lease —

At the inception of the finance the lessee should recognise the lease as an asset and a liability. The asset should be recognised at an amount equal to the fair value of leased asset at the inception. If the fair value exceeds the present value of the minimum lease payment from the stand point of the lessee, the amount to recorded as asset and liability reckoned with the present value of the minimum lease payments that may be calculated on the basis of interest rate implicit in the lease, if practicable to determine and if not, then at lessee’s incremental borrowing rate.

Lease payments should be apportioned between finance charges and the reduction of outstanding.

The depreciation policy for leased asset should be consistent with that for depreciable assets that are owned. AS-6 (Depreciation Accounting) applies in such cases.

Disclosure should be made of —

assets acquired under finance lease,

net carrying amount at the balance sheet date,

reconciliation between the total minimum lease payments at balance sheet date and their present value,

total minimum lease payments at balance sheet date and their present value for periods specified,

contingent rent recognised as income,

the total of future minimum sublease payments expected to be received and

general description of significant leasing arrangements.

In case of operating lease —

The lease payments should be recognised as an expense on straight line basis, unless other systematic basis is more representative of the time pattern of the user’s benefit.

Disclosures should be made of —

the total of future minimum lease payments for the periods specified,

the total of future minimum sublease payments expected to be received,

lease payments recognised in the statement of Profit & Loss, with separate amounts of minimum lease payments and contingent rents,

sublease payments recognised in the statement of Profit & Loss and

general description of significant leasing arrangements.

Treatment in the books of lessor

In case of finance lease —

The lessor should recognise the asset in its balance sheet as a receivable at an amount equal to net investment in the lease.

The recognition of finance income should be based on a pattern reflecting a constant periodic return on the net investment of the lessor outstanding.

In case of any reduction in the unguaranteed residual values, income allocation over the remaining lease term should be revised.

Initial direct cost are either recognised immediately in the profit and loss statement or allocated against the finance income over the lease term.

Disclosure should be made of —

total gross investment in lease and the present value of the minimum lease payments at specified periods and a reconciliation thereof at the balance sheet date,

unearned finance income,

accruing unguaranteed residual value benefit,

accumulated provision for uncollectible minimum lease payments receivable,

contingent rent recognised,

general description of significant leasing arrangements and

accounting policy adopted in respect of initial direct costs.

In case of operating lease —

Lessors to present an asset given on lease under fixed assets. Lease income should be recognised on a straight line basis over the lease term or other systematic basis, if representative of the time pattern over which benefit derived gets diminished.

Costs, including depreciation, incurred are recognised as an expense.

Initial direct cost are either deferred and allocated to income over the lease term in proportion to rent income recognised or are recognised immediately in the profit and loss statement.

Disclosure should be made of —

gross carrying amount of the leased assets, accumulated depreciation and impairment loss at the balance sheet date and depreciation and impairment loss recognised or reversed for the period,

the future minimum lease payments in aggregate and for the periods specified,

total contingent rent recognised as income,

a general description of the significant leasing arrangements and

accounting policy for initial direct costs.

Lease by Manufacturer or Dealer

The manufacturer or dealer lessor should recognise the transaction in accordance with policy followed for outright sales. Initial direct costs should be recognised as an expense at the inception of the lease. Artificial low rates of interests are quoted, profit on sale should be restricted to that which would apply if a commercial rate of interest were charged.

Sale and leaseback transactions

If the transaction of sale and leaseback results in a finance lease, any excess or deficiency of sale proceeds over the carrying amount, it should be deferred and amortised over the lease term in proportion to the depreciation of the leased assets.

If the transaction result in an operating lease and it is clearly established to be at fair value, profit or loss should be recognised immediately. If the sale price is below the fair value, any profit or loss should be recognised immediately, except that, if the loss is compensated by future lease payments at market price, it should be deferred and amortised in proportion to the lease payments over the period for which asset is expected to be used. If the sales price is above fair value, the excess over the fair value should be deferred and amortised over period of expected use of asset.

In an operating lease, if the fair value at the time of sale and leaseback transaction is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and fair value should be recognised immediately.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-19

1)

Has the enterprise taken asset on:

(a)

Finance lease?

Yes/No

(b)

Operating lease?

Yes/No

2)

Has the enterprise given asset on:

(a)

Finance lease?

Yes/No

(b)

Operating lease?

Yes/No

3)

If asset taken on finance lease:

(a)

Is the leased asset recognised as asset equal to the fair value?

Yes/No

(b)

If the fair value exceeds the present value of the minimum lease payments, is the asset recorded at the present value of the minimum lease payments?

Yes/No

(c)

Is discount rate in calculating the present value of minimum lease payments taken as:

(i)

Interest rate implicit in the lease? or

Yes/No

(ii)

If not practicable, then at lessee’s incremental borrowing rate?

Yes/No

(d)

Are lease payments apportioned between finance charge and the reduction of the outstanding
liability?

Yes/No

(e)

Is depreciation provided at the rate for which own assets are depreciated?

Yes/No

(f)

Is disclosure made in financial statements as required by AS?

Yes/No

4)

If asset given on finance lease:

(a)

Is the amount shown as a receivable equal to the net investment in the lease?

Yes/No

(b)

Is the lease rental apportioned between finance income and reduction of the outstanding receivable?

Yes/No

(c)

If commission and legal fees incurred

(i)

Written off immediately?

Yes/No

(ii)

Allocated against the finance income over the lease term?

Yes/No

(d)

Is disclosure in financial statements made as required by AS?

Yes/No

5)

If the asset taken on operating lease:

(a)

Is the lease payment expensed in the Profit & Loss statement on a straight line basis?

Yes/No

(b)

If no to (a) above, is it on a systematic basis more representative of the time pattern of the
user’s benefit?

Yes/No

(c)

Is disclosure in financial statements made as required by AS?

Yes/No

6)

If the asset given on operating lease:

(a)

Is the asset shown as Fixed Asset?

Yes/No

(b)

Is the income recognised on a straight line basis in the statement of Profit & Loss?

Yes/No

(c)

Is depreciation provided at the rates for which similar assets are depreciated?

Yes/No

(d)

Is disclosure in financial statements made as required by AS?

Yes/No

7)

Is the enterprise:

(a)

Also involved in leasing of assets sold?

Yes/No

(b)

If yes, is the sales revenue (and corresponding receivable) recorded at the fair value of the
assets?

Yes/No

(c)

If no, is profit on sale of asset restricted by applying commercial rate of interest over lease term?

Yes/No

8)

(a)

Has the enterprise entered into sale and lease back transaction? Yes/No

(b)

If the transaction is finance lease, is the excess or deficiency of sale proceeds over the carrying
amount amortised over the lease term in proportion to depreciation?

Yes/No

(c)

If the transaction is operating lease, and the transaction is:

(i)

Established at fair value, whether profit or loss recognised immediately?

Yes/No

(ii)

Below fair value whether profit or loss recognised immediately unless falling in (iii) below?

Yes/No

(iii)

Below fair value and loss is to be compensated by charging lower lease rentals than market value, whether the loss amortised over the expected use of the asset?

Yes/No

(iv)

Above fair value whether the gain deferred and amortised over the expected use of
the asset?

Yes/No

AS-20 — EARNINGS PER SHARE

Basic and diluted EPS is required to be presented on the face of Profit and Loss Statement with equal prominence for all the periods presented. EPS is required to be presented even when it is negative.
Basic EPS should be calculated by dividing net profit or loss for the period attributable to equity shareholders by weighted average of equity shares outstanding during the period.
In arriving earnings attributable to equity shareholders preference dividend for the period and the attributable tax are to be excluded.
The weighted average number of shares, for all the periods presented, is adjusted for bonus issue or any element thereof in rights issue, share split and consolidation of shares.
For calculating diluted EPS, net profit or loss attributable to equity shareholders and the weighted average number of shares are adjusted for the effects of dilutive potential equity shares (i.e., assuming conversion into equity of all dilutive potential equity).
Potential equity shares are treated as dilutive when, and only when, their conversion into equity would result in a reduction in profit per share from continuing ordinary operations.
The effects of anti-dilutive potential equity shares are ignored in calculating diluted EPS.
For the purpose of calculating diluted EPS, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period should be adjusted for the effects of all dilutive potential equity shares.
The amounts of earnings used as numerators for computing basic and diluted EPS and a reconciliation of those amounts with Profit and Loss Statement, the weighted average number of equity shares used as the denominator in calculating the basic and diluted EPS and the reconciliation between the two EPS and the nominal value of shares alongwith EPS per share figure need to be disclosed.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-20

1)

Is the company

(a)

Listed?

Yes/No

(b)

Required by statute (Sch. VI) or choosing to disclose earnings per share?

Yes/No

(c)

If answer to (a) and (b) is yes, is working/disclosure made as per AS-20?

Yes/No

2)

If there is any fresh Equity issue made during the year, is weighted average number of equity shares outstanding during the period considered for working basic equity per share?

Yes/No

3)

(a)

Has the enterprise during the year or after year end but before approval of account by the
Board of Directors.

Yes/No

(i)

Issued Bonus Shares?

Yes/No

(ii)

Issued Rights issue having a bonus issue?

Yes/No

(iii)

Made Share split?

Yes/No

(iv)

Made a reverse share split?

Yes/No

(v)

Made buy-back above fair value?

Yes/No

(b)

If yes to above, is the basic equity per share for current period as well as all reported periods
worked out after considering the above change ?

Yes/No

4)

(a)

Are the following convertible into Equity Shares

(i)

Preference share?

Yes/No

(ii)

Debentures?

Yes/No

(iii)

Loans?

Yes/No

(b)

If yes, to above is the net profit (numerator) for the period attributable to equity shareholders for computing dilutive equity per share:

(i)

Increased by the amounts of dividend net of tax saved on preference shares?

Yes/No

(ii)

Increased by the amount of interest net of tax saved on debentures/loans?

Yes/No

(c)

If yes, to a) above is the Equity Share (Denominator) increased by weighted average number of additional equity shares outstanding, assumed to be converted for working dilutive equity per share?

Yes/No

5)

(a)

Are options issued, convertible at rate less than the fair value?

Yes/No

(b)

If yes, has the dilutive effect been worked out as a difference between the number of shares
issuable and the number of shares that would have been issued at fair value?

Yes/No

6)

(a)

Are Anti-dilutive Potential equity shares ignored in calculating diluted Earnings share?

Yes/No

(b)

For above working in each series of potential equity shares considered separately rather than aggregate?

Yes/No

7)

Has the enterprise disclosed

(a)

Basic and diluted earnings per share with equal prominence on face of profit and loss
statement for all periods presented?

Yes/No

(b)

Basic and diluted earnings per share even if there is loss as per profit and loss statement?

Yes/No

(c)

(i)

Amounts used as the numerators in calculating basic and diluted equity per share?

Yes/No

(ii)

Reconciliation of amount if the net profit as used in numerator is different from net profit
as per profit and loss statement?

Yes/No

(d)

(i)

Weighted average number of equity shares as the denominator in calculating basic and diluted earnings per share?

Yes/No

(ii)

Reconciliation of the weighted average number of equity shares used in denominator if different
for calculating basic and diluted earnings per share?

Yes/No

(e)

Nominal value of shares along with earnings per share figures?

Yes/No

(f)

On the face of profit and loss statement basic and diluted earnings per share excluding extraordinary items net of tax? (though of a recommendatory nature)?

Yes/No

AS-21 — CONSOLIDATED FINANCIAL STATEMENTS

To be applied in the preparation and presentation of consolidated financial statements for a group of enterprises under the
control of a parent.
Control means the ownership of more than one-half of the voting power of an enterprise or control of the composition of the
board of directors or such other governing body.
Control of composition implies power to appoint or remove all or a majority of directors.
Consolidated financial statements to be presented in addition to separate financial statements.
All subsidiaries, domestic and foreign to be consolidated except where control is intended to be temporary or the subsidiary
operates under severe long-term restriction impairing transfer of funds to the parent.
Consolidation to be done on a line by line basis by adding like items of assets, liabilities, income and expenses which involve.
Elimination of cost to the parent of the investment in the subsidiary and the parent’s portion of equity of the subsidiary at the date of investment.
Excess of cost over parent’s portion of equity, to be shown as goodwill.
Where cost to the parent is less than its portion, of equity, difference to be shown as capital reserve.
Minority interest in the net income to be adjusted against income of the group.
Minority interest in net assets to be shown separately as a liability.
Intra group balances and intra-group transactions and resulting unrealised profits should be eliminated in full. Unrealised Losses should also be eliminated unless cost cannot be recovered.
Where two or more investments are made in a subsidiary, equity of the subsidiary to be generally determined on a step by step basis.
Financial statements used in consolidation should be drawn up to the same reporting date. If reporting dates are different, adjustments for the effects of significant transactions/events between the two dates to be made.
Consolidation should be prepared using same accounting policies. If the accounting policies followed are different, the fact should be disclosed together with proportion of such items.
In the year in which parent subsidiary relationship ceases to exist, consolidation to be made up-to-date of cessation.
Disclosure is to be of all subsidiaries giving name, country of incorporation, residence, proportion of ownership and voting power if different, nature of relationship between parent and subsidiary, effect of the acquisition and disposal of subsidiaries on the financial position, names of subsidiaries whose reporting dates are different than that of the parent.
When the consolidated statements are presented for the first time figures for the previous year need not be given.
While preparing consolidated financial statements, the tax expense to be shown in the consolidated financial statements should be the aggregate of the amounts of tax expense appearing in the separate financial statements of the parent and its subsidiaries.
‘Near Future’ should be considered as not more than twelve months from acquisition of relevant investments unless a longer period can be justified on the basis of facts and circumstances of the case.
When there are more than one investor in a company in which one of the investors controls the composition of board of directors and some other investor holds more than half of the voting power, both these investors are required to consolidate the accounts of the investee in accordance with this Standard.

Note: Not all the notes appearing in standalone financial statements is required to be disclosed in the consolidated financial statements.Typically notes that are not required to be included are, managerial remuneration, CIF value of import, capacity, quantitative details, etc.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-21

1)

(a)

Has the enterprise Subsidiary/ies?

Yes/No

(b)

Is the enterprise required to prepare and present Consolidated Financial Statement?
(at present listed companies only required)?

Yes/No

(c)

If yes to (b) above, has the enterprise prepared and presented CFS in accordance with AS-21?

Yes/No

2)

Has the parent at the time of preparing CFS

(a)

Eliminated investment in each subsidiary, worked out goodwill or Capital Reserve as at the
date of investment in the subsidiary?

Yes/No

(b)

Shown minority interest in the net income?

Yes/No

(c)

Shown minority interest in the net assets in consolidated balance sheet separately from liabilities
and the equity of the parent’s shareholders?

Yes/No

3)

Have the following relating to Intra-group been eliminated in CFS?

(a)

Balances and transactions?

Yes/No

(b)

Unrealised profits arising out of inventory/Fixed Assets?

Yes/No

(c)

Unrealised losses unless cost cannot be recovered?

Yes/No

4)

(a)

Are the financial statements of parent and subsidiaries drawn up to the same reporting date?

Yes/No

(b)

If no, is the difference between reporting dates not more than six months and ?

Yes/No

(c)

Are significant events and transaction between the two reporting dates adjusted in consolidated financial statements?

Yes/No

5)

(a)

Are accounting policies uniform of parent and subsidiaries in preparing consolidated financial statements?

Yes/No

(b)

If no, is the fact disclosed together with proportions of items in the CFS to which the
different accounting policies applied?

Yes/No

6)

(a)

Is goodwill arising on CFS amortised in Statement of Profit and Loss?

Yes/No

(b)

If no, to (a) above, is impairment test thereof carried out at each balance sheet date?

Yes/No

7)

When consolidated financial statements are presented first time, has the enterprise not presented
comparative figures of previous period?

Yes/No

8)

Has the enterprise ensured at time of preparing consolidated financial statements that the tax expense of parent and subsidiaries are not adjusted against one another but only aggregated the amounts of tax expenses as appearing in their separate financial statements?

Yes/No

9)

Has the enterprise ensured that only material items are disclosed and that statutory information having no bearing on the true and fair view are not included in the consolidated financial statements?

Yes/No

10)

Have the following disclosures been made in consolidated financial statements:

(a)

The reasons for not consolidating a subsidiary in the CFS?

Yes/No

(b)

Non use of uniform accounting policies and the proportions of items in CFS to which the
different accounting policies have been applied?

Yes/No

(c)

(i)

List of all subsidiaries with name?

Yes/No

(ii)

Country of incorporation?

Yes/No

(iii)

Proportion of ownership interest?

Yes/No

(d)

Nature of relationship between the parent and subsidiary, if the parent does not own directly or indirectly through subsidiaries more than one half of the voting power of the subsidiary?

Yes/No

(e)

(i)

The effect on financial position at the reporting date and the results for the reporting period and on the corresponding preceding period in case of disposal of subsidiary?

Yes/No

(ii)

The effect on the financial position at the reporting date in case of acquisition of subsidiary?

Yes/No

(f)

The name of subsidiary(ies) of which reporting date is/are different from that of the parent and the difference in reporting dates?

Yes/No

AS-22 — ACCOUNTING FOR TAXES ON INCOME

This statement should be applied in accounting for taxes on income. This includes the determination of the amount of the expense or saving related to taxes on income in respect of an accounting period and the disclosure of such an amount in the financial statements.
The expense for the period, comprising current tax and deferred tax should be included in the determination of the net profit or loss for the period.
Deferred tax should be recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets as set out in paragraph below.
Except in the situations stated in paragraph 5, deferred tax assets should be recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
Where an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets should be recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.
Current tax should be measured at the amount expected to be paid to (recovered from) the taxation authorities, using the applicable tax rates and tax laws.
Deferred tax assets and liabilities should be measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax assets and liabilities should not be discounted to their present value.
The carrying amount of deferred tax assets should be reviewed at each balance sheet date. An enterprise should write-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such writedown may be reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available.
An enterprise should offset assets and liabilities representing current tax if the enterprise:

(a) Has a legally enforceable right to set off the recognised amounts; and

(b) Intends to settle the asset and the liability on a net basis.

An enterprise should offset deferred tax assets and deferred tax liabilities if:

1. (a) The enterprise has a legally enforceable right to set off assets against liabilities representing current tax; and

2. (b) The deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

Deferred tax assets and liabilities should be distinguished from assets and liabilities representing current tax for the period. Deferred tax assets and liabilities should be disclosed under a separate heading in the balance sheet of the enterprise, separately from current assets and current liabilities.
The break-up of deferred tax assets and deferred tax liabilities into major components of the respective balances should be disclosed in the notes to accounts.
The nature of the evidence supporting the recognition of deferred tax assets should be disclosed, if an enterprise has unabsorbed depreciation or carry forward of losses under tax laws.
On the first occasion that the taxes on income are accounted for in accordance with this statement, the enterprise should recognise, in the financial statement, the deferred tax balance that has accumulated prior to the adoption of this statement as deferred tax asset/liability with a corresponding credit/charge to the revenue reserve, subject to the consideration of prudence in case of deferred tax assets. The amount so credited/charged to the revenue reserve should be the same as that which would have resulted if this statement had been in effect from the beginning.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS 22

1)

Is there a difference between accounting income and taxable income?

Yes/No

2)

Is the difference a timing difference, comprising, inter alia;

(a)

Depreciation?

Yes/No

(b)

Section 43B?

Yes/No

(c)

Deferred revenue expenses partly appearing in balance sheet?

Yes/No

(d)

Preliminary expenses u/s. 35D?

Yes/No

(e)

Income credited in P & L Statement, taxable in subsequent years?

Yes/No

(f)

Provision for doubtful debts/advances?

Yes/No

(g)

Voluntary retirement schemes?

Yes/No

(h)

Lease income?

Yes/No

(i)

Diminution in value of investments other than temporary?

Yes/No

3)

Is the difference a permanent difference comprising of

(a)

Scientific research expenditure (weighted deduction)

Yes/No

(b)

Penalty for infringement of law

Yes/No

(c)

Dividend income (if non-taxable)

Yes/No

(d)

Donations to trusts u/s. 80-G

Yes/No

4)

(a)

Does reasonable certainty of future taxable income exists when deferred tax asset is recognised?

Yes/No

(b)

Does virtual certainty supported by convincing evidence of future taxable income exists when
deferred tax asset is recognised for carried forward loss or unabsorbed depreciation?

Yes/No

(c)

Is unrecognised deferred tax asset reassessed at each balance sheet date?

Yes/No

(d)

Is recognised deferred tax asset reviewed at each balance sheet date?

Yes/No

5)

Is deferred tax asset/liability measured using tax rates

(i)

That are enacted? or

Yes/No

(ii)

Substantively enacted [if tax rates announced through budget] by the balance sheet date?

Yes/No

6)

Is deferred tax asset/liability created at Minimum Alternate Tax (MAT) rate or at normal tax rate?

Yes/No

7)

Is deferred tax asset and liability presented in financial statement as under:

(a)

DTA/DTL disclosed separately from current tax?

Yes/No

(b)

DTA is shown after Investments but before current assets and DTL is disclosed after unsecured
loans but before current liabilities in the balance sheet?

Yes/No

(c)

Break-up of DTA/DTL into major components of balances disclosed in notes to accounts?

Yes/No

(d)

The nature of evidence supporting the recognition of DTA disclosed when DTA comprises of unabsorbed depreciation or carried forward loss?

Yes/No

AS-23 — ACCOUNTING FOR INVESTMENT IN ASSOCIATES IN CONSOLIDATED FINANCIAL STATEMENT

This statement should be applied in accounting for investments in associates in the preparation and presentation of consolidated financial statements by an investor. An investment in an associate should be accounted for in a consolidated financial statement under the equity method except when:

(a) The investment is acquired and held exclusively with a view to its subsequent disposal in the near future, or

(b) The associate operates under severe long-term restrictions that significantly impair its ability to transfer funds to its investors. Investment in such associates should be accounted for in accordance with the Accounting Standard (AS)-13, Accounting for Investments. The reason for not applying the equity methods in accounting for investments in an associate should be disclosed in the consolidated financial statements.

An investor should discontinue the use of equity method from the date that:

(a) It ceases to have significant influence in an associate but retains, either in whole or in part, its investments, or

(b) The use of the equity method is no longer appropriate because the associate operates under severe long-term restrictions that significantly impair its ability to transfer funds to the investors. From the date of discontinuing the use of equity method, investments in such associates should be accounted for in accordance with Accounting Standard (AS)-13, Accounting for Investments. For this purpose, the carrying amount of investments at that date should be regarded as the cost thereafter.

Goodwill/capital reserve arising on the acquisition of an associate by an investor should be included in the carrying amount of investment in the associate but should be disclosed separately.
In using equity method for accounting for investment in an associate, unrealised profits and losses resulting from transactions between the investor (or its consolidated subsidiaries) and the associate should be eliminated to the extent of the investor’s interest in the associate. Unrealised losses should not be eliminated if and to the extent the cost of the transferred asset cannot be recovered.
The carrying amount of investment in an associate should be reduced to recognise a decline, other than temporary, in the value of the investment, such reduction being determined and made for each investment individually.
In addition to the disclosures required by paragraphs 2 and 4, an appropriate listing and description of associates including the proportion of ownership interest and, if different, the proportion of voting power held should be disclosed in the consolidated financial statements.
Investments in associates accounted for using the equity method should be classified as long-term investments and disclosed separately in the consolidated balance sheet. The investor’s share of the profits or losses of such investments should be disclosed separately in the consolidated statement of profit and loss. The investor’s share of any extraordinary or prior period items should also be separately disclosed.
The name(s) of the associate(s) of which reporting date(s) is/are different from that of the financial statements of an investor and the differences in reporting dates should be disclosed in the consolidated financial statements.
In case an associate uses accounting policies other than those adopted for the consolidated financial statements for transactions and events in similar circumstances and it is not practicable to make appropriate adjustments to the associate’s financial statements, the fact should be disclosed along with a brief description of the differences in the accounting policies.
On the first occasion when investment in an associate is accounted for in consolidated financial statements in accordance with this statement, the carrying amount of investment in the associate should be brought to the amount that would have resulted had the equity method of accounting been followed as per this statement since the acquisition of the associate. The corresponding adjustment in this regard should be made in the retained earning in the consolidated financial statements.
Adjustments to the carrying amount of investment in an associate arising from changes in the associate’s equity that have not been included in the statement of profit and loss of the associate should be directly made in the carrying amount of investment without routing it through the consolidated statement of profit and loss. The corresponding debit/credit should be made in the relevant head of the equity interest in the consolidated balance sheet. For example, in case the adjustment arises because of revaluation of fixed assets by the associate, apart from adjusting the carrying amount of investment to the extent of proportionate share of the investor in the revalued amount, the corresponding amount of revaluation reserve should be shown in the consolidated balance sheet.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-23

1)

(a)

Is the enterprise required to prepare consolidated financial statement?

Yes/No

(b)

If yes, to (a) above, does the enterprise have investments in a company, considered as
an associate?

Yes/No

(c)

If yes, to (b) above, is associate also considered in consolidated financial statement?

Yes/No

2)

Has the enterprise worked out goodwill/capital reserve arising at the time of acquisition?

Yes/No

3)

Is the carrying amount of the investment in associate increased or decreased to recognise investor’s share of the profit or losses of the associate after the acquisition?

Yes/No

4)

Are the unrealised profits resulting from transactions between the investor and its subsidiaries with associate eliminated to the extent of investor’s interest in the associate?

Yes/No

5)

(a)

Is investment in associate acquired and held exclusively with a view to its subsequent
disposal in near future? Or

Yes/No

(b)

Does the associate operate under severe long-term restrictions that significantly impair its
ability to transfer funds to the investor?

Yes/No

(c)

If yes, to (a) or (b) above, is investment in associate accounted for in accordance with AS-13, Accounting for Investments.

Yes/No

6)

Has the enterprise disclosed the following:

(a)

Reasons for not applying equity method in accounting for investments?

Yes/No

(b)

Goodwill/capital reserve arising on acquisition separately in the carrying amount of investment in the associate?

Yes/No

(c)

Name and description of associate, including the proportion of ownership interest and if
different, the proportion of voting power held?

Yes/No

(d)

(i)

Investments in associates classified as long-term investments and shown separately?

Yes/No

(ii)

Share of profit or losses and extraordinary or prior period items separately?

Yes/No

(e)

Difference in reporting date(s) along with the names of the associate(s)?

Yes/No

(f)

Difference in accounting policies not adjusted in financial statements and a brief description of
the differences in the accounting policies?

Yes/No

AS-24 — DISCONTINUING OPERATIONS

The objective of this statement is to establish principles for reporting information about discontinuing operations, thereby enhancing the ability of users of financial statements to make projections of an enterprise’s cash flows, earnings-generating capacity, and financial position by segregating information about discontinuing operations from information about continuing operations.
A discontinuing operation is a component of an enterprise that the enterprise, pursuant to a single plan, is: (1) disposing of substantially in its entirety, such as by selling the component in a single transaction or by demerger or spin-off of ownership of the component to the enterprise’s shareholders; or (2) disposing of piecemeal, such as by selling off the component’s assets and settling its liabilities individually; or (3) terminating through abandonment; and that represents a separate major line of business or geographical area of operations; and that can be distinguished operationally and for financial reporting purposes.
With respect to a discontinuing operation, the initial disclosure event is the occurrence of one of the following, whichever occurs earlier (a) the enterprise has entered into a binding sale agreement for substantially all of the assets attributable to the discontinuing operation; or (b) the enterprise’s board of directors or similar governing body has both (i) approved a detailed, formal plan for the discontinuance and (ii) made an announcement of the plan.
An enterprise should apply the principles of recognition and measurement that are set out in other Accounting Standards for the purpose of deciding as to when and how to recognise and measure the changes in assets and liabilities and the revenue, expenses, gains, losses and cash flows relating to a discontinuing operation.
When an enterprise disposes of assets or settles liabilities attributable to a discontinuing operation or enters into binding agreements for the sale of such assets or the settlement of such liabilities, it should include, in its financial statements, the following information when the events occur (a) for any gain or loss that is recognised on the disposal of assets or settlement of liabilities attributable to the discontinuing operation, (i) the amount of the pre-tax gain or loss and (ii) income tax expense relating to the gain or loss; and (b) the net selling price or range of prices (which is after deducting expected disposal costs) of those net assets for which the enterprise has entered into one or more binding sale agreements, the expected timing of receipt of those cash flows and the carrying amount of those net assets on the balance sheet date.
Any disclosures required by this statement should be presented separately for each discontinuing operation. The disclosures requirements may be quickly assessed by referring to questoinnaire below.
An appendix to the Standard (though not a part of the Standard) sets out detailed illustration explaining significant disclosure requirements of the Standard.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-24

1)

Is a component of the enterprise that represents a separate major line of business or geographical area of operations and that can be distinguished operationally and for financial reporting purposes been decided to be:

(a)

Sold off substantially in its entirety?

Yes/No

(b)

Sold off in piecemeal?

Yes/No

(c)

Terminated by abandonment?

Yes/No

2)

If yes to (a) above when has the

(a)

Enterprise entered into a binding sale agreement for sale of the assets attributable to the discontinuing operations?

Yes/No

(b)

Enterprise’s board of directors approved a detailed formal plan for the discontinuance and
made an announcement of the plan?

Yes/No

3)

Has the enterprise measured the changes in the assets and liabilities and revenue expenses relating
to discontinuing operation as set out in other accounting standards mainly impairment of assets?

Yes/No

4)

Is separate disclosure made for each discontinuing operation?

Yes/No

5)

Are prior period figures restated to segregate assets, liabilities, revenue, expenses and cash flow of
continuing and discontinuing operations as disclosed in current year?

Yes/No

6)

Has the enterprise disclosed the following in the notes (except a (vii) and b (i) to be shown on face of profit and loss statement) to the financial statements

(a)

In relation to initial disclosures —

(i)

A description of the discontinuing operation?

Yes/No

(ii)

Business or geographical segment as reported in segment reporting?

Yes/No

(iii)

Date and nature of the initial disclosure events?

Yes/No

(iv)

Date or period in which the discontinuance expected to be completed if known or determinable?

Yes/No

(v)

The carrying amount as of the balance sheet date of the total assets (to be disposed of) and liabilities (to be settled)?

Yes/No

(vi)

Amount of revenue and expenses in respect of the ordinary activities attributable to discontinuing operation during the current year?

Yes/No

(vii)

Amount of profit/loss before tax and income tax (current and deferred) thereon from ordinary activities attributable to discontinuing operation?

Yes/No

(viii)

Amount of net cash flow attributable to operating, investing and financing activities of
discontinuing operation during the current year?

Yes/No

(b)

In relation to other disclosures, when the events occur;

(i)

The amounts of pre-tax gain or loss and income tax expense relating thereto on disposal
of assets or settlement of liabilities attributable to the discontinuing operation?

Yes/No

(ii)

The net selling price or range of prices of those net assets for which one or more binding sale agreements are entered into, the expected timing of receipt of those cash flows, and thecarrying amount of those net assets on the balance sheet date?

Yes/No

(c)

In relation to updating of disclosures;

(i)

Description of any significant changes in the amount or timing of cash flows relating to the assets to be disposed or liabilities to be settled? and

Yes/No

(ii)

Events causing those changes?

Yes/No

(d)

In relation to completion of discontinuance;

(i)

Disclosure to be made till the plan is substantially completed or abandoned, though full payment may not yet have been received from the buyer?

Yes/No

(e)

In relation to abandonment or withdrawal of plans previously reported as a discontinuing operation.

(i)

Fact, reasons therefor and its effects be disclosed?

Yes/No

(f)

In relation to each discontinuing operation.

(i)

Disclosure be made for each discontinuing operation separately?

Yes/No

AS-25 — INTERIM FINANCIAL REPORTING

Accounting Standard (AS)-25, ‘Interim Financial Reporting’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2002. If an enterprise is required to prepare and present an interim financial report, it should comply with this Standard.
The objective of this Statement is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in a complete or condensed financial statements for an interim period. Timely and reliable interim financial reporting improves the ability of investors, creditors, and others to understand an enterprise’s capacity to generate earnings and cash flows, its financial condition and liquidity.
Interim period is a financial reporting period shorter than a full financial year. Interim financial report means a financial report containing either a complete set of financial statements or a set of condensed financial statements (as described in this Statement) for an interim period.
An interim financial report should include, at a minimum, the following components

condensed balance sheet;

condensed statement of profit and loss;

condensed cash flow statement; and

selected explanatory notes.

An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report:

a statement that the same accounting policies are followed in the interim financial statements as those followed in the most recent annual financial statements or, if those policies have been changed, a description of the nature and effect of the change;

explanatory comments about the seasonality of interim operations;

the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence, net profit or loss for the period, prior period items and changes in accounting policies);

the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year orchanges in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period;

issuances, buy-backs, repayments and restructuring of debt, equity and potential equity shares; (f) dividends, aggregate or per share (in absolute or percentage terms), separately for equity shares and other shares;

segment revenue, segment capital employed (segment assets minus segment liabilities) and segment result for business segments or geographical segments, whichever is the enterprise’s primary basis of segment reporting (disclosure of segment information is required in an enterprise’s interim financial report only if the enterprise is required, in terms of AS-17, Segment Reporting, to disclose segment information in its annual financial statements);

the effect of changes in the composition of the enterprise during the interim period, such as amalgamations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations; and

material changes in contingent liabilities since the last annual balance sheet date.

Interim reports should include interim financial statements (condensed or complete) for periods as

balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year;

statements of profit and loss for the current interim period and cumulatively for the current financial year to date, withcomparative statements of profit and loss for the comparable interim periods (current and year-to-date) of the immediately preceding financial year;

cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.

An enterprise should apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. However, the frequency of an enterprise’s reporting (annual, half-yearly, or quarterly) should not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes should be made on a year-to-date basis.
Users may refer four appendices attached to the Standard (which though not a part of the Standard) set out detailed illustrations explaining inter alia;

1. — Illustrative format of Condensed Balance Sheet, Condensed Profit and Loss Account, Condensed Cash Flows.

2. — Illustration of periods required to be presented.

3. — Examples of applying the recognition and measurement principles.

Examples of use of estimates. _ It may be mentioned that the companies required to disclose quarterly results are not required to follow the disclosure-related requirements of the Standard. Thus presentation format is not mandatory. However, it is a normal practice to adopt the recognition and measurement principles.

QUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS-25

1)

(a)

Is the enterprise required to prepare and present interim financial report?

Yes/No

(b)

If yes, to (a) above, has the enterprise prepared and presented information for the interim date as per the form and content as applicable to annual complete set of financial statement unless otherwise required in a different form as per statute or as per regulatory body governing the enterprise?

Yes/No

2)

Are the following information, if material and not disclosed elsewhere in interim financial statements been disclosed by way of notes:

(a)

A statement that the same accounting policies are followed or if changed a description of the
nature and effect of the change?

Yes/No

(b)

Comments about the seasonality of interim operations?

Yes/No

(c)

Nature and amount of items affecting assets, liabilities, equity, net income or cash flows that are
unusual because of their nature, size or incidence?

Yes/No

(d)

Nature and amount of changes in estimates of amounts reported in prior interim periods of current financial year or changes in estimates of amount reported in prior financial years?

Yes/No

(e)

Issuances, buy-backs, repayments and restructuring of debt, equity and potential equity shares?

Yes/No

(f)

Dividends, aggregate or per share?

Yes/No

(g)

Segment revenue, segment capital employed and segment result for business segments or geographical segments, depending upon enterprise’s primary basis of segment reporting?

Yes/No

(h)

Effect of changes in composition of the enterprise during interim period, such as amalgamations, acquisitions, or disposal of subsidiaries and long-term investments, restructuring and discontinuing operations?

Yes/No

(i)

Material changes in contingent liabilities since the last annual balance sheet date?

Yes/No

3)

Has the enterprise in its interim financial statement (condensed or complete) for the period included the following:

(a)

Balance sheet as of the end of current interim period and a comparative balance sheet as of the end of the immediately preceding financial year?

Yes/No

(b)

Statement of Profit and Loss for the current interim period and cumulatively for the current financial year to date, with comparative statements of profit and loss for the comparable interim periods (current and year-to-date) of the immediately preceding financial year?

Yes/No

(c)

Cash flow statements cumulatively for the current financial year-to-date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year?

Yes/No

4)

Has the enterprise followed the recognition and measurement principles in preparation of interim financial statement as illustrated in the AS in respect of:

(a)

Gratuity and other defined benefit schemes?

Yes/No

(b)

Major planned periodic maintenance or overhaul or other seasonal expenditure?

Yes/No

(c)

Provisions?

Yes/No

(d)

Year end bonuses where there is legal obligation or payable as per past practice?

Yes/No

(e)

Intangible Assets? Yes/No

(f)

Other planned (discretionary in nature) but irregularly occurring costs?

Yes/No

(g)

Income-tax expense for interim period?

Yes/No

(h)

Income-tax expense when difference in financial reporting year and tax year?

Yes/No

(i)

Tax deductions/exemptions for determining tax payable?

Yes/No